faculty speak

Myth 1: Is Marketing only for MNCs and not SMEs?

A few months ago, I was taking a compressed course on marketing for a group of second generation entrepreneurs. During the introduction, I asked the participants to describe their current ‘marketing practices’. And almost everyone responded that they are a small or medium enterprise and do not need professional marketing practices.

They are not exceptions in thinking so about marketing. Majority of the entrepreneurs in the SME sector feel the same. Their argument is that their business process is fairly simple, with majority of them producing limited range of products or catering to limited customers or selling their products in a limited geographical area.

They argue that they practice marketing at a required level. After all, the fundamental purpose of marketing is to ‘generate demand’ and ‘fulfill it’.  And this is what they do. Almost every entrepreneur generates demand for whatever he produces and fulfills it successfully.

This then brings us to the argument: ‘whether marketing is actually an MNC fad?’

To understand it let’s understand what MNCs do differently on the marketing front. They also ‘generate demand’ and ‘fulfill it’. But they do not stop merely at that. On the demand front, they actually ‘drive demand’. They do this by being in touch with their customers. They pre-empt what a customer will expect and appreciate in the product. Whereas, on the fulfillment front, they focus on a whole lot of ‘value creation’ not only for themselves but also for their customer. This value creation is done by actions such as ‘branding’, ‘relationship marketing’, ‘customer service’ ‘strategic distribution’ and ‘strategic pricing’. In the end, it’s a win-win situation for both the manufacturer as well as the customer. Manufacturer – because he gets a better price, customer preference and continuity of business and; customer – because he gets an assured product, better service, and social recognition.

In fact many of the MNCs have grown phenomenally because marketing is at the focal centre of their business process. At times, they do not mind outsourcing manufacturing to SMEs on ‘contractual’ basis. This actually leaves them with a lot of time to invest on the customer and serve them better. 

Now, when the SMEs shun marketing by arguing it is for the MNCs, they actually shun all the above mentioned advantages. Is this being a good entrepreneur? Don’t you want your customer to pay you a better price – willingly? Don’t you want your customer to come back to you for a repeat purchase and also recommend your product to his friends and peers? Don’t you want to steadily grow as a business on the goodwill created?

I am sure, your answers to most of the above questions are affirmative. After all, which entrepreneur doesn’t want his product to fetch a better price; his customer to keep coming back to him and also bring more customers along; his business to grow and become more and more profitable? Well, then you must start right away. Make a resolution to make ‘marketing’ as a focal point of your business.

The fundamental difference between a marketing oriented organization and otherwise is that a marketing focused organization is ‘outward looking’ and the otherwise is ‘inward looking’. There has been a famous quote of Henry Ford, who said, “Any color is alright, as long as it is black.” This is a testimony of an ‘inward looking’ organization. Such organizations do not care about customer preferences and feel that they are doing a great favor to the customer by manufacturing the product for him. This very philosophy of Ford – actually the pioneer of automobiles in the world – explains its debacle when it faced stiff competition from several players including the Japanese.

On the other hand, an ‘outward looking’ organization understands the pulse of the consumer better. This, many times, gives them an edge to stay ahead of the competition. 

There may still be an argument against marketing that it is a costly affair and only MNCs can afford it. Well there are some costs associated with every business activity. You may look at the marketing costs in two ways: One, as an investment and not one time cost. When you practice marketing, you are doing it from the long-term perspective to ensure continuity and long-term profitability of your business. Two, you can also look at the marketing investment as an immediate pay-back by way of improved price, faster inventory clearances, and higher sales.

In sum-total you will tend to benefit not only in the long term but also short term if you adopt professional marketing practices.

Lastly, the strongest argument for SMEs to adopt professional marketing practices is to overcome their vulnerability as a business. A large organization may be able to absorb some inefficiencies in some way or the other. However, an SME has to be efficient on all fronts of the business processes. There are several success stories of SMEs who became what they are by adopting cutting edge marketing practices. Some of them have even beaten MNCs in their own game.

Moreover, in today’s world, staying away from marketing is like staying away from growth. Today, there are more business opportunities than ever before. However, one needs to be very market savvy to tap these opportunities and make his business ever-growing. In fact, with the world becoming virtually boundary-less as far as business is concerned, marketing is becoming a prerequisite – just like world-class technology – for successful conduct of business.  

All the entrepreneurs in the SME sector need to draw a lot of inspiration from successful people like Steve Jobs (Apple Computers); Bill Gates (Microsoft) and even Karsanbhai Patel (Nirma) who started their business as SMEs but went on to challenge the established competitors who were many times larger than them. They adopted apt marketing practices to do so. In the process, they not only made their competitors allow them respectable place in the market but also became fairly large themselves.

So, the choice is entirely yours, whether to shun marketing as an ‘MNC fad’ and continue doing your business in the old style OR adopt marketing strategies for your own good and grow as a respectable and profitable business for a fairly long term.

Prof Rajeev Kamble
Associate Professor
Marketing