How to Understand Marketing in Small Firm


Recently, the clarion call has gone out for more aggressive, more rigorous, more sustained, or simply more marketing by Britain’s small firms. Improved marketing, particularly by smaller manufacturers, is central to the industrial stratetgy. The need for small companies to emphasise marketing in develop­ing their business was the cornerstone of the 1978 report on in­dustrial innovation by the government’s Advisory Council for Applied Research and Development.

Despite this, many managers of small firms question the relevance of marketing to them, given the severe limits on their resources, particularly of time and money. Large advertising budgets, expensive and time-consuming market research projects and the jargon which marketing appears to involve hold little appeal to the practical small firm manager. Problems in meas­uring the pay-offs from this effort reinforce the notion that mar­keting is a luxury, which only large and wealthy firms can afford.

However, many smaller businessmen intuitively apply the marketing concept every day. This is often done in a manner almost impossible for the large firm manager to achieve. It is because, as an approach to business, marketing is both simpler and more subtle than any of the cruder notions of large ex­penditures in areas such as advertising. It involves seeing the firm’s goals in terms of meeting customer needs and wants. It means recognising that the better the firm matches its offering product, process or service to what the customer wants, the higher the value he will place on it. The higher this valuation, the stronger the relationship, with resulting improvements in returns for both the producer and the buyer. It is not a philan­thropic gesture by firms, but an approach to improving the management of the exchanges between producer and buyer resulting gains in performance.

The closeness that characterises relations between the managers of small enterprises and customers, whether a small plastics processor dealing with industrial buyers or tenant landlord with regulars, provides a powerful basis for the dialogue essential to effective marketing. The initial step involves recognising the im­portance of looking outside the firm into the market place for leads to further developments.

This was seen by Midland Furnishings. They produce a wide array of furniture, particularly wooden dining and living room furniture. Timber wall units are a major line. They used to pro­duce these in teak and to a height of about five feet six inches. A few years ago the firm made a major effort to introduce their products into Euorpe. They suffered an early setback, primarily because these styles were not popular in the major European markets, and the wall unit market was dominated by other woods and different sizes. A product-oriented firm would probably have abandoned its efforts to develop these markets. A sales-oriented company might have worked very hard, spend­ing large sums of money to win sales against retailer reservations and customer rejection. The response or this small owner-managed firm was very different. Lacking the money or resources immediately to introduce new designs for these mar­kets, the lessons from the market were built into long-term de­sign work. In the next major styling exercise conducted by the firm, its offerings incorporated these ideas. The intervening period has been used to explore their thinking with major TJK retail buyers who encouraged their developments. In fact, changes in housing design, particularly the popularity of con­verting traditional domestic storage space to other uses, was creating changed customer needs. These pressures were encour­aging sales of larger units in Britain. The rapid growth in demand at home for their units is now preventing a new Euro­pean initiative.

This contrasts dramatically with the difficulties facing Century Belting, a small producer of transmission belts. Their prosperity had been built over many years through their strong re­lationships with a number of major manufacturers. An export initiative some time ago had failed because of the highly auto­mated equipment used by European customers. Despite their considerable technical expertise and longer-term potential to adapt, the firm decided to concentrate their resources on satis­fying the day-to-day needs of their current domestic customers. However, the progressive growth in inter-European trade has forced their British customers to adapt rapidly to meet Euro­pean competition. Over the last two years, a number of major accounts have bought new equipment from other suppliers as the company has worked to solve the technical problems associ­ated with the newer systems. A number of competitors have es­tablished toeholds with Century Belting’s traditional customers.

The adoption of a marketing perspective by Midland Furni­ture permitted them to steal a march on their competitors. There were no increases in advertising or more conventional marketing costs. They recognised that their prosperity was built on successfully meeting customers’ needs both today and as they changed over time. Their networks of relationships and contacts provided their information base. Their technical skills and production capability gave them the opportunity to develop.

Century Belting’s difficulties contrast vividlv with this. Their primary focus of attention was their current offerings and capabilities. They assumed that they were immune to change. Technical skills, production orientation and dangerous assump­tions trapped them into a negative approach to buyer needs.

Changes in the market place forced them to invest heavily in price cutting, increased services, advertising and promotion to arrest the tide which their lack of marketing insight had led them to ignore.

It is recognition that successful businesses are based on effec­tively meeting buyer needs that is the essence of marketing. The different areas of activity – information gathering and organis­ation, product policy, promotion and selling, pricing and distri­bution – gain their real value from being built on this and the firm’s willingness to implement lessons from the market place. The smaller firm with its stronger, more direct links to the mar­ket place, shorter lines of communication, flexibility and ability to act quickly and decisively has the scope to implement the reality rather than the appearance of marketing.

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About the Author: Marie Mayle is a contributor to the MegaHowTo team, writer, and entrepreneur based in California USA. She holds a degree in Business Administration. She loves to write about business and finance issues and how to tackle them.

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