The importance of entrepreneurial marketing
In the current global context of business interactions, marketing has secured the highest position as an influencing element in the success of organizations. With globalization and technological developments, the world market has doubled in size with open or limited business interactions between various countries. With the sudden boom in business communications, many new industries have sprung up along with hundreds of small and medium-sized enterprises coming up every day. The sudden increase in new and developing enterprises has created further more competition amongst the business-holders. New and innovative techniques for marketing have been theorized to enhance competitiveness and ensure survival in the face of dynamic market environments.
This report aims to investigate and critically analyze the various theories, tools and techniques of entrepreneurial marketing, especially in the case of SMEs. By a thorough understanding of the various entrepreneurial concepts and practices, this paper aims to establish the various ways entrepreneurial marketing can influence the success of a business organization.
This paper has been established on the basis of an extensive literature review based on the theories and concepts of entrepreneurial marketing and study of business performance of various organizations. According to (Nikfarjam and Zarifi 2015), the rapidly changing marketing conditions press the need to bring about a creative and innovative approach to marketing that would be inclusive and considerate of the changing technological needs, depletion of resources and global financial crisis. Not only the large-scale business operations, the small and medium-sized enterprises, new start-ups and even governmental organizations need to adopt entrepreneurial marketing, which focuses on the entrepreneurship skills of an organization, in order to make itself sustainable against the test of time. Since the constant aim of businesses is to derive more value from their operational processes, it is important to ensure that the available resources are put to best use in order to retain maximum value, or even create more value in the process.
According to (Ponelis 2015), entrepreneurial marketing has proven to be one of the most essential elements for the survival of small and medium-sized enterprises (SMEs), as they face a constant struggle against the bigger Companies and their powerful marketing strategies. By carrying out an exhaustive research of various interviews, documentaries and content-analysis, the paper determined that the necessity of entrepreneurial marketing differs with the different sizes of organizations. Networking has been identified as one of the most influential factors that determine the success of various entrepreneurial responsibilities. The study proposes an integrated approach to marketing that would be more inclusive of the various factors that play active role in influencing marketing operations.
According to (Spigel 2017), the characteristics of a business organization, like its age, size and founder, are directly connected with its entrepreneurial behaviors. The study conducts extensive personal interviews of business owners or entrepreneurs, in order to produce a ground work for their characteristic patterns. Using a multi group CFA, the collected data was analyzed and found that only a firm’s age and size, and not the founding status if its owner, is responsible for impacting the organization’s entrepreneurial behaviors. As established by the information provided in this paper, the relationship shared between entrepreneurial behavior and firm characteristics are much more complex and intricate than they appear. As per (Jong et al. 2015), the concept of entrepreneurial behaviors cannot be measured through the characteristics of a firm alone; rather, aims to identify and analyze the entrepreneurial management behaviors through analyzing latent variables identified from extensive surveys.
Theoretical background of entrepreneurial marketing
There are particular distinguishing features that separate small-scale business enterprises from the rest of the organizations (Kozlowski and Matejun 2016). In order to critically understand the entrepreneurial behaviors of SMEs, it is essential to first understand their distinguishing characteristics, which further determine the entrepreneurial behaviors. The specific characteristics of SMEs are briefly discussed as follows:
Low Income/Profit: The revenues of SMEs are relatively much lower than large-scale organizations. The focus of the organization might not be profit-maximization and might focus on expanding the business by producing more value through their operational processes. According to (Aghion et al. 2015), lower revenue does not always mean lower levels of profit; rather, the organization may decide to invest in further technological advancements or newer tools and accessories, which would bring down the costs of production while retaining the value of production.
Small Employee-body: Another important characteristic of small scale business organizations is the small body of employees, as compared to the larger ones. Many small-scale firms are run individually or with less than 100 employees. At an initial stage of business, the small scale or developing organizations cannot afford to hire large bodies of employees and are generally characterized by small employee bodies.
Area of Market: The market areas of SMEs are comparatively much smaller than the other large-scale organizations. SMEs often cater to respective communities or localities (Carraher, Welsh and Svilokos 2016). Therefore, the concept of small-scale firms is to look after small scale activities and market areas that are almost inaccessible by the larger corporations.
Ownership of Enterprise: An essential characteristic of small-scale business organizations is that they do not conform to the corporate structure of large-scale business organizations (Campos, Goldstein and McKenzie 2015). Since the small business firms mostly work as sole-proprietorships or partnerships, these organizations are characterized by the greatest degree of managerial governance that removes the need for a corporate business registration.
As the entrepreneur of a small-business firm, there are multiple challenges faced regularly, like shortage of funds, hiring the best employees, reducing cost of production and more. In order to sustain the small-scale business firm in a highly competitive market, it is essential to have a prior idea regarding the various challenges that are faced by small-scale enterprises, especially in operational processes (Flynn, McKevitt and Davis 2015). The key operational issues that are faced by small-scale firms, in the process of marketing, are briefly discussed below:
Lack of resources: One of the biggest challenges faced by small-scale enterprises is the lack of available resources, including financial resources like funds, external investments, etc. Due to small size of operational processes, these organizations have lesser access to resources (Lonial and Carter 2015). This also includes lack of funds to hire enough employees for the organization.
Consistency in marketing activities: Another challenge faced by small-scale industries is the need to keep up the consistency of marketing activities, which is extremely important in order to survive the acute competitiveness of this globalized market (Karadag 2015). Maintaining a consistency in marketing activities and keeping them relevant with the changing business conditions of the Company is a necessity as well as a major challenge for most small-scale organizations.
Characteristics of SMEs
Meeting consumer expectations: Another major challenge faced by the small-scale firms is the need to satisfy consumer-expectations and needs, with the available resources and funds. With huge technological advancement and shift in consumer-demand, it has become a rising challenge for small-scale firms to satisfy consumer-demands.
A standard marketing theory emphasizes the need to investigate and analyze the various business environmental factors that have a direct impact on the operational processes of an organization. The specific business factors that have direct influence on organization’s performance can broadly be divided into two major parts, the internal organizational environment and the external organizational environment. The internal organizational environment focuses on the internal environment of a particular firm, taking into account characteristics like, organizational communication, employee satisfaction, available resources, economic stability, consumer demand and more. On the other hand, the external organizational environment refers to the external industry factors of the firm that play an important role in influencing the Company’s operational processes (Inglehart and Norris 2016). The external factors of an organization include the political, economic, technological, environmental, legal and sociological elements of the particular market environment, which play a vital role in determining the organization’s performance and success in the given locality (Bruns-Smith et al. 2015).
Various tools, techniques and theories have been developed to bring about an appropriate comparison and measurement of business factors, which can further help in reducing their exposure to detrimental elements. The various management tools include the SWOT Analysis, PESTEL Analysis, Porter’s Five Forces Analysis, Balanced Scorecard Analysis and many more. Each of these techniques has been devised for various organizations with their respective characteristics. The selection of each technique must consider the various needs and requirements of the particular organization in order to know which would suit best. A ‘Standard’ marketing theory emphasizes on the need to have a conclusive and well-researched marketing plan, exclusively based on the needs and requirements of the small-business in concern. According to the requirements of the concerned firm, the entrepreneurial management team would be responsible for the improvement of the organization. A critical analysis of the Company’s external and internal factors would help in identifying the particular strengths, weaknesses, opportunities and threats of the organization, which can help in controlling the dire effects and utilizing the strengths for even better outcome.
The two best management practices that can be inculcated in an organizational setup are briefly discussed below:
The main aim of the small-scale organizations is to minimize risks to business by implementing specific skills and abilities, and following a particular business practice. The employability and Changemaker skills emphasize on the need to grow leadership and entrepreneurship qualities that would help the organization to survive the test of time. Word of Mouth (WOM) is one of the strongest and most influential marketing techniques that imposes minimum costs and allows more space for entrepreneurs to invest on other requirements. Most entrepreneurs waste a significant amount of time and capital on advertising and promotional campaigns, yet fail to understand how Word of Mouth influences customer choices and preferences, especially from trusted sources. WOM is exemplary for organizations that function on limited capital and can prove to be a powerful tool for entrepreneurial marketing in SMEs (Littlewood and Holt 2018). Positive reviews and suggestions from trusted customers of a Company can be utilized to reach out to multiple other potential customers, as well as gain a primary level of trust and confidence in the organization. However, one of the major risks of this technique is that entrepreneurs can never have control over the reviews of existing customers.
Best practice methods of entrepreneurial marketing for SMEs
Word of Mouth Marketing (WOMM) emphasizes on the organic ways to spread out the organizational processes and reaching out to a multiplied number of customers (Karadag 2015). It specifically uses the various components of viral marketing, for example the carry forward of information of value, via natural channels like sharing experiences or discomfort of various users and potential buyers. The most important element of WOMM is that it is completely free of cost and does not add to the tight organizational budget.
As a new approach to business management and sustainability, the Changemaker and employability skills have been regarded as most important in the process of entrepreneurial management. It exclusively stresses on creative and innovative thinking, problem-solving, decision-making and other such core activities. According to (Thompson-Whiteside, Turnbull and Howe-Walsh 2018), by inculcating specific leadership qualities and practices, not only will the firm be clearer about their expectations from employees but also would be able to control them in a systematic fashion. One of the important tools of entrepreneurial is Innovative Marketing, which essentially emphasizes on the need to incorporate required amendments and changes in the organizational processes, in order to fit it best with the existing business conditions of the industry and market. Innovative Marketing is not just finding creative ideas for solving organizational issues, but also includes making necessary improvements in the quality of products and services offered, understanding the current demand of the consumers and implementing necessary innovations in the marketing processes, in order to retrieve best results (Johnson 2015). In a constantly dynamic business environment it is absolutely necessary to keep monitoring the marketing processes and its impacts on organizational performance, in order to clearly understand its particular lacks and modify them accordingly.
One of the most important elements of marketing, especially in Small-Medium sized Enterprises is innovation skill. In a perfectly competitive and dynamic environment, innovation is the only technique that leads to ground-breaking results, uniting the organization’s goals with its capabilities (Aghion et al. 2015). Innovation can be brought in to several dimensions including digital innovation, cost-saving innovation, technological innovation and many more.
Conclusion:
To conclude, entrepreneurial marketing is extremely necessary, especially in case of developing small and medium-scale organizations, in order to survive the acute competition in the international business market. Entrepreneurial Marketing focuses on an integrated approach to marketing that considers and analyzes various social, economic, political and cultural factors and then provide applicable ways to solution. With the help of an exhaustive literature review, this paper has aimed to discuss in detail the relationship of SMEs with the Entrepreneurial Marketing practices or behaviours. The various operational issues of SMEs include lack of resources and financial abilities and therefore, entrepreneurial marketing is even more necessary as it emphasizes on reducing costs of production while adding to value-creation.
Finally, the research has recommended two most essential practices or methods that help in nurturing entrepreneurial marketing skills in SMEs.
References:
Aghion, P., Cai, J., Dewatripont, M., Du, L., Harrison, A. and Legros, P., 2015. Industrial policy and competition. American Economic Journal: Macroeconomics, 7(4), pp.1-32.
Bruns-Smith, A., Choy, V., Chong Ph D, H. and Verma Ph D, R., 2015. Environmental sustainability in the hospitality industry: Best practices, guest participation, and customer satisfaction.
Campos, F., Goldstein, M. and McKenzie, D., 2015. Short-term impacts of formalization assistance and a bank information session on business registration and access to finance in Malawi. The World Bank.
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