Marketing Challenges for Small Businesses Term Paper

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Marketing Challenges for Small Businesses

This research paper is about building and marketing a small business. While marketing plays an important role in the day-to-day running of a small business it's also about planning for its long-term development, which requires multi-dimensional objectives beyond mere cost-per-sale. The emphasis of marketing is on understanding the diversity of consumer behavior, implementing segmentation strategies, cultivating consumer-oriented definitions of innovations, adopting a policy of continual improvement and exploring every opportunity to broaden their industry. Small business can now compete in a global marketplace with big businesses, thus making a significant contribution to the national economy. The Internet offers small businesses a worldwide structure of business promotion.

Although customers and their needs are the focal point of the marketing process, few companies start with this in mind. Invariably somebody had a good idea for a product or service and this became the initiative to start the business. The "product" refers to the commodity that the company will offer clients, which may involve concentrating on a narrow product line, developing a highly specialized product or service, or providing a product-service package containing high-quality service. The business owner needs to conduct market research to gather information about the business to create a marketing plan.

Entrepreneurs tend to be an independent group that has particular talents and trades, and this can result in a focus on "production" or "doing" and a lack of emphasis on marketing. Indeed, the marketing acumen of many small business people seems to be derived from informal (and convenient) verbal exchanges with suppliers, distributors, and customers (Johnson and Keuhn 1987). While such exchanges are an excellent source of information, they cannot replace a systematic approach to seeking marketing help and developing marketing plans.

(Weinrauch et al.)

While many businesses see the product or service to be at the heart of the firm's marketing efforts, the company must learn to see its output as flexible and subject to development and adaptation. In 1964, the Harvard Business Review published a landmark article entitled "The Concept of the Marketing Mix." In this article, Harvard professor Neil Borden coined the term "Marketing Mix" to describe the variety of different marketing elements that must be "mixed" together to produce an effective marketing plan.

The ingredients in Borden's marketing mix included product planning, pricing, branding, distribution channels, personal selling, advertising, promotions, packaging, display, servicing, physical handling; and fact finding and analysis. E. Jerome McCarthy later grouped these ingredients into four categories - product, price, promotion, and place - that today are known as the 4 P's of marketing." (Borden)

The most fundamental task of the small business owner is managing the marketing mix. Each of the four Ps is capable of influencing demand either separately or together with the other marketing mix elements. The "product" consists of the services and benefits that the company will offer clients. "Price" relates to the fee structure that the business adopts. While some new business owners may believe that unless they offer the lowest possible price they will not win the order, it is better to build one's reputation on quality workmanship and service rather than quoting low prices to get a job and then doing poor-quality work to make it pay. Bear in mind that the customer buys a "package" of benefits, which includes aspects such as reputation, quality of workmanship, and before and after sales service; and the price ought to reflect the value of the total package. "Promotion" is concerned with how to communicate with customers and prospects. In practice the promotional element of the marketing mix falls into two broad categories, namely personal promotion (face-to-face dealing with customers) and impersonal promotion (advertising, promotions, direct marketing).

Marketing is a vital aspect to the success of a small business. Personal promotions is a two-way process that gives the prospective purchaser the opportunity to ask questions about the product or service; the sales message can be tailored to the needs of individual customers; and the salesperson can build a relationship with customers and thereby lay the foundations for repeat business. Today the salesperson needs to be extremely knowledgeable about developments in related industries as well as one's own products and services. It's no longer enough to know the benefits of one's own product or service to make a sale; the salesperson must also know what the competition is doing and the likely future of their industry. The marketing plan must be re-evaluated at regular intervals to test its effectiveness.

Impersonal promotion takes the form of advertising and sales promotion, which includes all the options available to the business: standard media advertising (i.e. newspapers, magazines, radio, television), direct-mail advertising (leaflets, brochures, press releases), promotional items that incorporate the company name and contact details (t-shirts, pens, calendars, mouse pads, key chains) and Internet advertising (banner ads, affiliate programs, news releases, electronic newsletters, e-mail, message boards, web-site, viral marketing, and Weblogs). Even a company's stationery and appearance of its vehicles represent the business' identity.

Intuitively, small business researchers know that small businesses are quite innovative in adopting "shoestring" approaches. This perception is sometimes highlighted in the popular business literature. Many shoestring approaches are reported in the form of business vignettes, anecdotal stories, or occasional case studies. Moreover, some recent books dramatize marketing techniques for "bootstrapping" the small business (Davidson 1988, Weinrauch 1989). However, empirical studies that record small business owner experiences, perceptions, and levels of success related to marketing practices are lacking in the literature." (Weinrauch et al.)

Place" is the essential task of marketing that requires the business owner to match a firm's resources to customer needs in a way that gives satisfaction to both parties. It also means that the company has to search continually for something that will give them a competitive advantage over their competitors. The company must also keep an open mind about distribution channels and evaluate the effectiveness of existing channels on a regular basis.

The hottest medium going right now seems to be the Internet. The website is an excellent place to provide in-depth information about a company's products and services and to create awareness. Web advertising may take place through the use of display banners and the establishment of a website that provides more extensive information about the company. Advantages of advertising on the Net include message tailoring, interactive capabilities, information access, creativity, and international market potential. The way people purchase goods and services, manage their finances, and use and obtain information clearly seems to have redefined the business environment and changed the rules of business.

While the "four Ps of the marketing mix" is probably the most famous phrase in marketing, some business analysts add elements to the mix to include "people," "physical evidence" (such as uniforms, facilities or livery) and "process" (the whole customer experience) to the list of demand-influencing variables. "It is generally regarded by marketing professionals that the ultimate success of selling a product into a marketplace will come down to your business's ability to get these areas right." (Business Gateway)

Effective planning begins by gathering relevant information to write a business plan, which includes a marketing strategy. It also includes other information such as an analysis of the marketplace, an organizational plan, and measurable financial objectives. It helps to clarify all aspects of the projected business before the business owner spends too much valuable time and money on it. "The importance of a comprehensive, thoughtful business plan cannot be overemphasized. Much hinges on it: outside funding, credit from suppliers, management of your operation and finances, promotion and marketing of your business; and achievement of your goals and objectives. 'The business plan is a necessity. If the person who wants to start a small business can't put a business plan together, he or she is in trouble,' says Robert Krummer, Jr., chairman of First Business Bank in Los Angeles." (SBA)

No business or marketing plan is ever complete and inflexible. Additions or deletions may be necessary. Some things may not work out as expected, while others will have gone unnoticed in the original plan. It is important that the plan is reviewed on a regular basis. "Despite the critical importance of a business plan, many entrepreneurs drag their feet when it comes to preparing a written document. They argue that their marketplace changes too fast for a business plan to be useful or that they just don't have enough time. But just as a builder won't begin construction without a blueprint, eager business owners shouldn't rush into new ventures without a business plan" (ibid).

Monitoring environmental change

The prerequisite for monitoring environmental change is an effective marketing information system. The use of market research on an ongoing basis is vital to an understanding of the changing requirements of the customer. A straightforward questionnaire given to customers and prospects can help business owners to assess their marketing strengths and weaknesses or identify opportunities that affect sales and profitability. While it is important to monitor aspects like population shifts and legal developments, business owners should also…

Sources Used in Document:


Beech, Wendy M. "Crafting Your Sales Technique: With a Marketing Plan, You Can Put Your Sales and Promotion Strategies in Place." Black Enterprise Dec. 1997: 31. Questia. 20 May 2004

Beth Cox. Can Blogging Work for Your Small Business. Small Business Online marketing. February 3, 2004.

Boden. N. Prof. "The Concept of the Marketing Mix" NetMBA. 18 may 2004.

Business Gateway. The seven Ps of Marketing. 18 may 2004.

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