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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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Marketing is defined as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large” (American Marketing Association, 2013). It's a process and a tool used to bring success to businesses. Marketing has many concepts and theories that are applied in order to help businesses bring attention to their products and to increase a business' sales. However, not all marketing principles and approaches can be executed universally in all business types. Research provided in the essay shows that there are differences between the marketing practiced in large firms and small medium enterprises (referred to as SME in the essay). Arguments for and against SWOT analysis and the marketing mix will be discussed in context of small medium enterprises. The ‘opportunity discovery and creation' model will be described in detail and how it can help SMEs.

One marketing theory that is considered traditional would be using SWOT analysis for a business. SWOT analysis refers to analysing a business' strengths, weaknesses, opportunities and threats. By doing so, owner-managers can figure out what they can do to bring further success to their businesses. However, as other traditional marketing literature, this doesn't quite apply to SMEs (Resnick et al, 2016; Walsh and Lipinski, 2009). First and foremost, SMEs have limitations that large businesses may not have, such as lack of finance and marketing knowledge (Carson and Cromie, 1990). If a SME doesn't have the resources for marketing, they will have negative perceptions of it and will see it only as a costly procedure (Carson and Cromie, 1990). A SWOT analysis can prove to be expensive if a small firm must hire an expert in order to develop it. Since owners of SMEs are generalists (Gilmore, Carson and Grant, 2001), they may require outside help in order to make a SWOT analysis. SMEs do not have this kind of expertise (Gilmore, Carson and Grant, 2001), so they may be discouraged from implementing a SWOT analysis. Similarly, since owner-managers of SMEs are said to be generalists, they wouldn't have the knowledge to develop a SWOT analysis on their own. Another limitation of a SWOT analysis would be that it's time consuming. SME marketing is mostly “haphazard and informal” (Gilmore, Carson and Grant, 2001). Due to this, traditional marketing practices will not apply to SMEs (Carson and Cromie, 1990) because of the differences in business characteristics between large and small firms. SMEs are known to be sales driven (Parrott, Roomi and Holliman, 2010). A study showed the views of owner-managers of SMEs towards marketing that they used. The study demonstrated that any marketing implemented that doesn't have an immediate effect will not be considered useful (Parrott, Roomi and Holliman, 2010). A SWOT analysis can take a long time to be made and hence may not be preferred by owners of SMEs. A SWOT analysis has the ability to predict opportunities for a SME, however the implementation of the SWOT analysis may take too long, making SMEs miss the right timing for opportunities. SME owners are mindful of current opportunities (Gilmore, Carson and Grant, 2001) in order to keep their business running and so if they miss opportunities while conducting a SWOT analysis, it will prove to be more damaging than beneficial towards the SMEs.

The basis of marketing theories must come down to the original marketing mix. This includes the four main P's of marketing: product, place, promotion and price. The marketing mix is part of traditional marketing literature and it has been proven to help large businesses, but it's not suitable for SMEs (Gilmore, Carson and Grant, 2001). Overall, Carson (1993) (as cited in Reijonen, 2010) states that the 4 P's would be unsuitable for SMEs. Reijonen (2010) also claims that traditional marketing theories cannot be performed in SMEs. A problem that SMEs would face by using traditional marketing and the marketing mix would be lack of skills and financial support (Resnick, et al 2016). Owner-managers are said to not have much time for planning since they have to run the business and contribute to the day-to-day activities (Gilmore, 2011). Hence, they wouldn't have the time to implement a marketing strategy using the marketing mix. Also, research shows that owner-managers have an “impact” on how marketing is involved in their business (Resnick et al, 2011). Therefore, owner-managers may not include the marketing mix in their marketing activities if they don't think it will benefit their business. In addition, a problem stated previously is that most owner-managers do not have traditional marketing knowledge (Gilmore, Carson and Grant, 2001). Therefore they wouldn't be able to develop the marketing mix. A study conducted by Resnick et al (2016) shows that there was no “formal” marketing or marketing teams in 20 SME practices in the East Midlands of the UK and in terms of promotion, traditional marketing tools were not used due to high prices and traditional marketing being deemed as “unnecessary” by most of the owner-managers. Some SMEs even shared that they do not wish to be associated with advertising. They claimed that traditional marketing wasn't honest and did not include anything unique from the owner-manager. Most of the SMEs claimed that networking and word-of-mouth marketing contributed more to their business success, and that they believed traditional marketing would not contribute to their business succeeding. A similar study made by Resnick et al in 2011 showed that some SMEs believed traditional marketing such as advertising and sales promotion were thought as “damaging to credibility”, since owners wanted to perform activities to suit their individual businesses. Through research, Blankson et al (2006) deducted that SMEs don't practice “textbook” marketing. Their research provides further evidence to show that SMEs practice a different kind of marketing. Moriarity et al (2008) claims that marketing in SMEs must be researched more since SMEs are important to the economy. Thus, the evidence provided shows that the marketing mix can be perceived as ineffective to use by SMEs.

As seen, SMEs have difficulties with marketing in their businesses. SMEs shouldn't neglect marketing activities because research shows that marketing is more important for SMEs rather than large businesses due to the fact that a single consumer can affect the survival of SMEs (Becherer et al, 2012). Fortunately, research regarding marketing for SMEs has been increasing in the recent years (Cronin-Gilmore, 2012; Parrott, Roomi, Holliman, 2010; Resnick et al, 2011). Some of the research shows that a new marketing model has been developed for SMEs. The ‘Opportunity discovery and creation' model can be used as a marketing tool to aid SMEs with their business. Opportunity discovery refers to “the act or process of perceiving or finding a favourable set of circumstances to create value” and creation means “the act or process of shaping or creating a favourable set of circumstances to create value” (Chetty et al, 2018). The opportunity discovery and creation model is a type of entrepreneurial marketing. Audrey Gilmore (2011) defines entrepreneurial marketing as “opportunistic, intuitive and if the firm is to survive, it is profit driven”. Gilmore also claims that entrepreneurial and SME marketing is different from typical traditional marketing. Entrepreneurial firms can use the opportunity discovery and creation model as a marketing strategy. Finding and pursuing opportunities are marketing actions that have been proven to bring upon the success of SMEs (Becherer et al, 2012). Research conducted by Chetty et al (2018) showed that firms can “passively” find opportunities through networking with their customers and distributors. A review conducted by Fillis (2002) found that traditional marketing activities did not go along with SMEs behaviour and that SMEs can grow successful if they implement entrepreneurship practices into their marketing activities such as opportunity recognition and networking. The problems with traditional marketing for SMEs are many, but a significant one would be time. Zahra's study in 2008 (cited in Chetty et al, 2018) claims that when one opportunity is created, another one could follow because of the first one. Hence, if SMEs follow traditional marketing activities they could lose opportunities which would benefit them. Research conducted by Wyer, Donohoe and Matthews (2009) describes that SMEs should use the “discovery, choice and action” model which uses strategic thinking to make SMEs find more opportunities. Hence, the opportunity discovery and creation model focuses on opportunities to keep SMEs surviving and growing.  

Although most researchers seem to believe that traditional marketing practices won't suit SMEs, there are some that believe otherwise (Reynolds, 2002; Siu and Kirby, 1998; Simpson, 2003). There is a belief that traditional marketing practices and strategies can be used by SMEs and that it can benefit them. In general terms, marketing planning can bring success to any firm and it can help owner-managers to understand where they want their business to go and provide awareness (Carson and Cromie, 1990). Firstly, a case study conducted by Izvercianu and Miclea (2015) in Malta believed that SMEs should seek help from outside sources such as other businesses or universities in order to make a marketing strategy or to help them create customized marketing plans. Some researchers state that basic marketing principles can be applied to both large and small firms (Hill, 2001a). Hill's study also illustrated that SMEs were involved in “sophisticated” marketing planning, where some SMEs even had three-year long marketing plans made, which were reviewed every year (Hill, 2001b). Despite having disadvantages, a SWOT analysis can be of great help to SME owner-managers in terms of marketing planning. As mentioned, a SWOT analysis can find out the strengths, weaknesses, opportunities and threats to a business. Research shows that knowing a SMEs strengths, weaknesses, opportunities and threats is an effective tool to “align and focus” SMEs, also that if implemented properly, it can develop a strategic plan for the business (Tenney and Marquis, 2017). In addition, grouping the separate parts of a SWOT analysis (strengths and weaknesses, strengths and threats etc.) has been proven to increase success if done properly (Tenney and Marquis, 2017). The case study on a SME by Tenney and Marquis (2017) showed that a SWOT analysis of their company provided insights which would influence their business to grow. Similarly, Fillis (2002) claims that a SWOT analysis should be mixed with a more creative way of marketing, which will be beneficial to SMEs. Reynolds' study (2002) showed that SMEs that were given standard marketing advice, such as, SWOT and PEST analysis were successful in helping the firms. It showed that traditional marketing approaches could be applied to small firms without a doubt. Therefore, this proves that, in some cases, traditional and standard marketing can be successfully applied to SMEs and it can even lead to their growth and success.

Another point of marketing practices is the marketing mix. As seen above, there are many reasons as to why the marketing mix doesn't work for SMEs, however there are studies that say the opposite. Cronin-Gilmore (2012) shows that many SME owner-managers would like to be trained in marketing practices. The training that was shown in the case study was mostly done by volunteers which wouldn't be costly to SME owner-managers. Similarly, McLarty's (1998) case study shows that an entrepreneur was able to adapt marketing skills which led to his firm's growth. The case study depicts that marketing planning and the “correct” marketing mix can bring success to SMEs. Marketing textbooks state that for a marketing mix to be effective it must meet customer needs, create a competitive advantage, be well-blended and match the company's resources (Jobber and Ellis-Chadwick, 2016). Another article showing research of German SMEs shows that positive results can be achieved by the use of the marketing mix and that if aligned with business ideas, it can help reduce the risk for new product developments (Wieland, 2018). Other researchers also state that many people working in SMEs tend to think that the standard marketing approach is suitable for SMEs too, but with small changes, such as taking into account the budgets of SMEs (Reynolds, 2002). Reynolds' study also showed that managers and advisors of SMEs say that marketing training would be good for SME owner-managers. Also, it was shown that “formal” marketing and standard techniques could be applied to SMEs and that it would be helpful for their business success. Reynolds believes that conventional marketing can have a positive effect in improving the performance of small firms. Siu and Kirby (1998) show literature that notes if SMEs use marketing approaches and make a marketing mix it can aid them to design their own marketing plans. They also state that researchers either don't pay attention to SMEs limitations in terms of marketing, or that too much emphasis is put on their lack of resources and not enough on “normative” marketing and that a balance of both should be done and researched. Overall, research shows small and medium enterprises may find some benefits from using the marketing mix in their way with acknowledgement of their limitations. The marketing mix may prove to be effective for SMEs if it's executed properly and if the owner-managers have some marketing knowledge.

Overall, it can be depicted that there are many arguments for and against the marketing practices – SWOT analysis and the marketing mix – being used in SMEs. An argument for the use of marketing practices would be that, in some cases, they can help owner-managers to grow their firms. An argument against their use would be that the marketing techniques used in large firms can't be executed the same way for SMEs due to lack of resources.  The ‘opportunity discovery and creation' model has been proven to be advantageous for SMEs due to the fact that most SME owner-managers are generalists and can use opportunities for the growth of their business. The research complied has portrayed that SME's marketing style is not the same as the one shown in traditional marketing texts. However, if all the arguments in the essay are considered then a good notion to adapt would be to use traditional marketing concepts and theories to an extent in order to make solid baselines for new SMEs. Following that, the use of the ‘opportunity discovery and creation' model combined with marketing planning would be the most successful notion that SMEs can adapt.

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