The uniqueness of marketing in early-stage and smaller firms as compared to large corporations…
If you are an entrepreneur in the early stages of starting a business or operating a smaller firm, you may have found it challenging to use marketing principles implicitly based on large corporations. Is good Entrepreneurial Marketing (EM) different from the traditional marketing textbooks? This challenge has been raised in several annual meetings of the Global Research Symposium in Marketing and Entrepreneurship, which I chair. Many people, including myself, have long argued that just as a child is not a little adult, small entrepreneurial startups require marketing practices that are qualitatively different from those in large, mature firms.
What is EM?
Entrepreneurial Marketing in academia may be seen as an essential part of the evolving entrepreneurship field, as well as a new "school of marketing thought" in the marketing discipline. EM in the context of job generation in new enterprises and small businesses has risen to macroeconomic importance around the world.
Yet EM has important implications for firms in central Illinois and beyond. If one accepts the basic role of marketing as that of generating revenues, the practical issue is always "How?"
Marketing, as defined by the American Marketing Association, is “the creating, communicating, delivering and exchanging of offerings that have value for customers, clients, partners and society at large.” Entrepreneurs do in fact create, communicate and deliver. So, this could be applicable to defining not only marketing but also entrepreneurship. Entrepreneurship focuses on sources of opportunities, the processes of discovery, evaluation and exploitation of opportunities, and the individuals who act on them. So in blending marketing and entrepreneurship, and attempting to be somewhat more specific for business owners, what is EM?
EM is a spirit—an orientation as well as a process of pursuing opportunities and launching and growing ventures that create perceived customer value through relationships, especially by employing innovativeness, creativity, selling, market immersion, networking and flexibility. This view of EM is based on years of growing evidence. This article itself is based in part on in-depth interviews with entrepreneurs in the U.S. and Sweden, as well as a follow-up study of more than 400 randomly selected business owners by the National Federation of Independent Business Foundation.
The findings indicate that business owners engage in marketing practices that are collectively quite different from traditional marketing thinking. For example, there was little to support the oft-cited "4 Ps" (or variations around product, price, promotion and place) being combined systematically or as substitutable, although they are, of course, important to any business. Also, there are strong indications that many firms successfully adopt a selling orientation, even to the exclusion of a broader marketing orientation. Several other differences, at least in degree of emphasis, include the following:
Passion and Flexibility
All businesses today must be customer-oriented, so this is no surprise to business owners. But EM involves a greater intensity of customer orientation. There is a passion for serving customers often intermixed with the personal commitment of the entrepreneur. EM engages in marketing with the entrepreneur deeply involved, not as an abstract phenomenon. Preliminary findings from the NFIB study show that nearly everyone (96%) "makes customers a top priority.” Adaptation and flexibility take on a special importance in new and smaller enterprises. The entrepreneurs indicate that customers expect them to respond to their "particular needs or wishes" (87%). Part of being customer-oriented is to respond in a timely, positive manner, even as those demands change. Virtually all business owners indicate that they do.
Market Immersion, Research and Experience
EM includes entrepreneurs' day-to-day immersion in the marketplace, contributing to an understanding of customers and clientele rarely achieved by large corporations. Business owners can use this understanding, which is sometimes ignored, as a competitive asset.
Experience and customer contacts are often weighed more in making decisions than in formal, systematic methods used by their larger corporate competitors. For example, three of four business owners in the NFIB study consider it important to rely on "gut feeling" in their decision-making. Consistent with this, 86 percent agreed that they rely heavily on "experience" in making key decisions. One result from this is very limited formal market research, with 82 percent agreeing that their marketing decisions are more based on informal customer contact than on formal market research. Also, four out of five indicate that they learn from their competitors in the marketplace. And speaking to the "soft skills," nine out of 10 business owners agree that creativity stimulates good marketing decisions.
Networking and Long-Term Relationships
EM typically engages substantial networking and relationship building as a particularly important element. Seven in 10 entrepreneurs agree that they rely on key friends and partners to help them develop and market their products and services. In support of relationship marketing, nearly three quarters agreed that their decisions are based on information from personal and professional networks and 96 percent invested in building long-term relationships with their customers. A striking 97 percent agreed that they use a long-term orientation to build their businesses. A long-term perspective is also melded with another important finding. Ninety-four percent agreed that they "work hard" to build their "reputation, trust and credibility."
In EM, striving to identify opportunities is a day-to-day activity for business owners, with 83 percent indicating that they are consistently looking for new business opportunities. Four out of five also see innovative new products as central to their success.
Although business owners are not strong advocates for market research, they strongly believe in having a marketing plan. Four out of five agree that it is a critical business tool. This does not mean that the plan must be written, but focusing on the future is considered essential.
These components of EM are leading examples, but others can be identified and discussed. One message here is that there are different forms of marketing, including those that serve early-stage and smaller firms. Marketing classes at Bradley are leading-edge in this regard. Dr. Ed Bond, department head, recently noted that as much as half of the marketing field is in turbulence today, including consideration of social media. This area of marketing has not even been included in this article, in part due to relevant pieces elsewhere.
It must also be noted that some large corporations are more innovative than others, while some could be counted as EM practitioners. And at least one leading introductory marketing textbook specifically includes entrepreneurs as examples. But overall, EM is a new school of thought, and this short piece attempts to emphasize that what existing entrepreneurs and small business owners "do" sheds new light on what "works." We no longer assume that smaller firms just need simplified marketing as compared to large, "sophisticated" businesses. Indeed, many large firms are striving to learn from the practices of business owners.
As markets and technologies change, so changes marketing. The evolution of EM and acceptance around the world will lead to more successful strategies for entrepreneurs. iBi
Dr. Gerry Hills is the Turner Chair of Entrepreneurship at Bradley University. Dr. Hills may be contacted to obtain research methodology for this and related studies. Further analysis is underway. The findings discussed herein are from many studies and conference room discussions around the world. Special thanks to W. Denny Dennis, director of research at NFIB, and Claes Hultman at the Swedish Graduate School at Orebro University.