Integrated Marketing Communications and Small & Medium Enterprises (SMEs)
Volumn 2

Integrated Marketing Communications and Small & Medium Enterprises (SMEs)

Laxman Gaikwad,

Associate Professor – Department Of Commerce,

Women’s Arts and Commerce College, Nagpur, India.

E-Mail:laxmangaikwad11@rediffmail.com

Abstract:

The SME sector in India has assumed greater importance as the main employer of the displaced workforce, as well as being the main contributing sector to the economy of the country as supplier of essential goods and services. However, many players in this sector do not seem to appreciate the critical role played by the marketing communications mix in getting their products and services to the market and making the potential customers aware of these products and services, the quality and benefits of the offerings. While the subject of IMC in general has been extensively covered, there has not been a direct study relating to SMEs in India. However, the study will focus mainly on the effectiveness of adopting IMC in small enterprises not the minute details of the various elements of the IMC.

Keywords: Small & medium Enterprises (SMEs); Integrated Marketing Communications; Promotion; Advertising; Sales Promotions; Personal selling; Direct marketing; Public relations.

INTRODUCTION

Small and medium enterprises play a major role in both the developing and developed world. They are regarded as the engine of economic growth globally. SMEs make a major contribution to private sector output and employment. They play tremendous roles in the provision of goods and services, employment generation and they enhance competition and entrepreneurship. They contribute to the Gross Domestic Products (GDPs) of many countries and create a better standard of living. According to Kotler (2005), there have been very few studies conducted in relation to the relevance, significance and meaning of marketing communications in the context of small and medium sized enterprises (SMEs). This situation may have changed over the years but is still the case in the context of SMEs in India. The management of SMEs do not emphasize the promotion of goods and services. There is no proper planning in promoting their products and services.

BACKGROUND

SMEs in India have grown since Industrialisation. The introduction of the Industrialisation in 1991 resulted in loss of employment and the shrinking of the formal job market, impoverishment of people, thereby creating conditions for the proliferation of the SMEs. The land reform programme had a serious impact on companies operating in the agricultural sector, and in particular, SMEs.

The continued rural to urban migration spurred by a search for better opportunities in urban areas did not help either. This resulted in cities and towns becoming over-populated with people looking for employment in an economy with decreasing formal employment, resulting in them joining the SME sector..

India’s economic downturn from the year 2000, resulted in companies closing down or downsizing their operations, was another scourge that put pressure on the SME sector. Foreign companies left the country and invested in other countries in the region. Many people lost their jobs and started their own businesses, resulting in a high proliferation of SMEs in different sectors of the economy. SMEs contributed significantly to the economy, providing the goods and services that were in short supply from the year 2000 onwards, when large companies failed to produce enough to meet demand.

Today, SMEs are still the major producers of goods and services as most companies are still facing financial problems to boost their production. Against this background, analysts believe employment in the informal sector has far surpassed that in the formal economy, where only about 40% working adults in are still employed.  The unemployment rate has hiked to 74%, meaning that only a few people were formally employed and the rest were in the SME sector. Therefore, SMEs and micro-enterprises play a critical role in respect of both output and employment.

REVIEW OF LITERATURE

In any economy of the world, SMEs contribute very significantly in terms of employment creation and economic growth. SMEs have provided practical solutions to challenges such as poverty and declining household incomes to meet family basics such as food, school fees and access to health services, among others (Mukras, 2009). The development of the SMEs sector is therefore of paramount importance for any country irrespective of their level of development.

Marcomm Wise (2006) defines marketing communications as all strategies, tactics and activities involved in getting the desired marketing messages to intended target markets, regardless of the media use. Marketers have access to numerous forms of communication, referred to collectively as the marketing communications mix. Different authors have come up with varying elements of the communications mix.

Marketing communications affect the formation of brand, the brand image and consequently brand equity (Biedenbach and Marell, 2009). Nielsen (2009) advocates the creation of synergies across media to produce additional uplift. This can be achieved through an appropriate marketing communications media mix. A constant brand message must be conveyed and tailored to how the consumer interacts with specific media. The various communications mix elements are mutually reinforcing (Kotler, 2005), creating synergies in uplifting the brand image of the service or product. However, for these synergies to be realised, the communications mix must be run through the most effective communications media. Kotler (2006) defines marketing communications mix as the “Promotion” of the marketing Ps (Product, price, promotion and placement, people, process and physical evidence) and covers every method and medium of communicating with a target audience. He points out that, in many ways, the marketing communications mix is the heart of a marketing strategy around which everything else in sales and marketing is predicated.

ELEMENTS OF MARKETING COMMUNICATIONS MIX

McCarthy (1998) defines the Marketing communications mix as the specific mix of advertising, personal selling, sales promotion, public relations, and direct marketing, a company uses to pursue its advertising and marketing objectives.

Advertising helps small business to sell their Unique Selling Proposition (USP) to the prospective customers and reach out to large audiences to create brand images and appeals in a cost effective way. A USP can make a business super successful and differentiates an SME’s offering from the rest of the pack. Small enterprises supplying products and services targeted at mass consumer markets find advertising critical.

An SME can use print media – newspapers, trade magazines, fliers and brochures; outdoor advertising – billboards, kiosks, tradeshows and events; broadcast advertising – television, radio and the internet; covert advertising – advertising in movies; surrogate advertising – advertising indirectly under cover of other products; Public Service Advertising – advertising for social causes (conveys socially relevant messages about important matters and social welfare causes like AIDS, energy conservation, political integrity, deforestation, illiteracy and poverty); Celebrity Advertising – signing up celebrities for advertising campaigns, which consist of all sorts of advertising including, television advertising or even print advertisements.

The integrated marketing communications mix is a comprehensive marketing communication plan that combines and evaluates a variety of strategic communication disciplines – general advertising, personal selling, sales promotion, direct marketing, public relations, sponsorships and others, to provide clarity, consistency and maximum communication impact. Kotler (2006) adds that the mix also includes product styling and prices, the package’s shape and colour, the salesperson’s manner and dress and the place’s décor. All this communicates something to the buyer. Marketing communications mix thus plays a critical role in creating awareness and arousing interest and desire of trial and ultimately purchase of the product/service. It can contribute to the brand equity by crafting brand image and embedding the brand in the consumer’s memory.

By their very nature, these enterprises are usually small in size, family owned and are subject to both internal and external bottlenecks that hamper their development. The internal bottlenecks include lack of qualified and competent personnel, lack of funding and technological competitiveness to run functions that support the effective planning, initiation and the implementation of promotional programmes.

The small enterprises also face external bottlenecks that hamper their progress, and there is little, if any they can do to counter these. The bottlenecks include lack of demand for products, access to capital, economic and political marginalisation through ‘segregatory’ policies hinging on aspects of property rights, security of tenure and public procurement procedures, overvalued currencies that render imports more lucrative, bureaucratic tendencies, and distorted markets due to infrastructure and communication deficits. In India for example, all large companies require that all their suppliers be in possession of tax clearance (VAT) papers. Most small business may not have these, and ultimately they cannot be allowed opportunities to supply the large businesses, regardless of whether they have the capacity to supply or the quality. This is also regardless of whether their products are adequately promoted or not.

Given these scenarios, small businesses end up justifying that not much positives are reaped from promotion as long as the external bottlenecks hampering their business are not addressed. Given the existence of these external factors which cannot be easily eliminated, promotion ceases to be a critical success factor for the small businesses.

EFFECTIVENESS OF IMC

A Not every promotional activity results in positive outcomes

While it is correct that promotion yields positive results and ultimately business growth, it is not automatic that everyone who runs promotional activities is guaranteed of winning. It is mostly how the promotion is run. Thorough planning is essential, so that the implementation of the promotion programme is such that positive outcomes can be achieved. Promotion does not yield immediate tangible success, hence the need to commit resources towards it, in anticipation for future (indirect) payback. Kotler (2003) explicitly put it when he expressed that it is one thing to create awareness, it is another thing to sustain the attention attained, and still another thing to trigger action (in the form of purchasing the promoted product/service). He thus emphasised that it is not guaranteed that every promotional effort results in a sale, therefore promotion on its own cannot be deemed critical for a small business.

B. Promotion can be omitted from a marketing mix without much harm

Unlike the other three ‘P’s’ of a marketing mix, promotion can be omitted from a marketing mix programme without noticeable immediate detrimental effects. Price, place and product are indispensable. No-matter how much of promotional effort a company can engage in, if the product quality, price and distribution channels are not superior or competitive, customers can still shun these products. Promotion cannot sell products that are unacceptable to the market, no matter how much persuasive and pervasive the promoter can be.

Kotler (2005) points to an insufficient marketing budget leading to inability to an effective mix of the marketing elements.

Small business treatmarketing communications as a collection of isolated tools and activities such as brochure and video distribution, advertising, and so forth, instead of being treated as an integrated system and as such becomes ineffective.

IMPORTANCE OF IMC

Promotion improves attitude and feelings towards a product/service. Promotion is critical in small business enterprises because Customers need to be introduced to a new product/service and the value that it can add to their lives should be explained so that they understand and then come to like the product. Promotion ensures the customer attains information and ideas which are key to the customer’s decision about the product/service. Promotion is therefore critical as an information and knowledge dissemination tool.

A. Promotion leads to conviction and purchase of a product.

Conviction and purchase are the actions that a customer takes in response to the ‘stimulus and energy’ that will have been ‘induced’ by product awareness, knowledge, liking and preference. The customer can thus end up acquiring the product/service, and possibly thereafter make a repeat purchase of the same if some satisfaction and/or perpetual stimulation are achieved through persistent promotion. After the purchase, the customer still needs to be reminded, persuaded and convinced that they made the right choice in buying that product. Once the customer is convinced that the initial purchase was a right decision, they are inclined to do a repeat purchase/ acquisition, and ultimately become loyal customers. In today’s markets, customer loyalty is critical.

B. Promotion ultimately leads to business growth

‘Businesses do not advertise because they are big; they are big because they advertise’. This statement stresses the need for small businesses to promote their products/services so that they can grow. If successfully planned and implemented, promotion can ultimately lead to a company’s growth through increase in sales volumes. Sales are made much easier, and sales volumes can increase when consumers are informed, are knowledgeable, and possess much more interest in a product due to prior advertising.

IMC and SME’s

C. The need for integrated marketing communications

Kotler (2005) highlights that consumers receive so much information from marketers and screen out a good deal of it, it is important for marketers to devise communications that offer consistent messages about their products and are placed in media that consumers in the target market are likely to use. The answer to the screening effect is the adoption of the concept of integrated marketing communications, whereby the company carefully integrates and coordinates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its products.

Today, however, many companies are adopting the concept of integrated marketing communications. Under this concept, the company carefully integrates and coordinates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its products. As one marketing executive puts it, IMC builds a strong brand identity in the marketplace by tying together and reinforcing all your images. Kotler (2005) maintains that IMC solution calls for recognizing all contact points at which the customer may encounter the company, its products, and its brands. Each brand contact will deliver a message, whether good, bad, or indifferent. The company must strive to deliver a consistent and positive message at all contact points.

To help implement IMC, some companies appoint a marketing communications director or manager, who has overall responsibility for the company’s communications efforts.

IMC produces better communications consistency and greater sales impact. It places the responsibility in someone’s hands where none existed before to unify the company’s image as it is shaped by thousands of company activities. It leads to a total marketing communications strategy aimed at showing how the company and its products can help customers solve their problems.

FINDINGS AND ANALYSIS OF RESULTS

The study revealed that management at the majority of SMEs did not emphasise the need for marketing communications’ let alone integrated communications marketing mix to their employees. This shows that whatever little promotion was carried out in the organizations was mainly based on the whims of those in positions of power. There was no deliberate communications programme which involved the organization in a holistic fashion. It was noted that little effort is put into implementing communications mix by SMEs. Promotions pertaining to price offers are important tactics used to influence consumer behavior. Promotions such as price discounts and “buy one get one free,” are effective communications tools for encouraging consumers to buy. Hung and Le Hong (2005) recommends that plans for promotions should be top down strategy built plans, with tactical bottom-up purchase analysis and that they should be monitored frequently.

According to Krake (2005) and Hill and Wright (2001), promotion in SMEs focuses on product and price, use of brochures which are largely sales oriented, implying that building strong brands is not a high priority issue. This exposes the failure of SMEs to appreciate the functions of the communications mix and how an organization can benefit from an integrated communications programme. Where management engage limited promotion, it was noted that they do not plan what methods they will use prior to embarking on a communications mix to communicate to customers. This is a clear indication that the SMEs do not appreciate the importance of planning their communications mix to make a positive impact on their customers.

Overall, the study showed that little promotion is done in SMEs in India. Those who did, mainly used fliers and a few, mentioned in the radio. Just a handful uses the newspapers and television advertisements. Those who used fliers felt the fliers reached the right target as they were mainly distributed to people driving to and from work and those shopping in town as they go about their shopping. This tends to be rather ad hoc and is unlikely to yield the desired results

RECOMMENDATIONS

The Governments should assist SME’s through organizing regular marketing workshops and seminars via the Ministry of Small and Medium Enterprises. In order to move away from this prevailing situation and build up some dynamism in its operations, small businesses should also be involved in strategic marketing planning.

It is recommended that SMEs employ management who have the proper know-how and skills to plan and implement the company’s marketing communications mix. SMEs should be able to adjust to the requirements of the market which are always dynamic and should be flexible enough to change their operational strategies in relation to the changes in the market place.

In a lot of cases, small businesses suffer from limited promotions as they are not structured. They tend to be reactive to competitor activity or events happening in the community they operate. The end result is under-pricing as a competitive strategy, which erodes the business profits. The owner manager has to look for events and programs with natural tie-ins that reinforce the image of their created brand.

Most important, the education curriculum should introduce a curriculum which includes entrepreneurship even from primary school up to tertiary level. At tertiary level, learners should engage in a proper small business venture and apply all the business knowledge acquired throughout their education.

Government should reconsider the reestablishment of the old schools which focused on education for living, doing practical subjects with and entrepreneurial slant rather than try to channel every student into the academic educational stream

CONCLUSION

Promotion is critical to the success of a small business enterprise. However, it cannot be applied as a strategy in isolation, since the other elements of the marketing mix play a critical role in contributing to the overall success of the business. Unlike the other marketing mix elements (price, place of distribution and product), promotion is an activity that needs the channelling of resources towards it and does not yield immediate results, thereby making it ‘unaffordable’ for the small business.

Given the challenges that the small business enterprise faces both internally and externally, there is need for promotion to be used together with the other marketing mix elements. ‘Any form of promotion is like compound interest. It takes time to build up the residual returns but if you stick with it, the pay off can be substantial’, therefore promotion is critical to small enterprises.

REFERENCES

  1. Amin, S. and Banerjee, W., ‘Excellence in Advertising, Oxford Institute of Practitioners in Advertising/Butterworth Heinemann pp. 65–90, 2007.
  2. Baker, T. L., “Doing social research”, New York, Marketing communications McGraw Hill, 2001.
  3. Beck, Asli Demirguç-Kunt, and Vojislav Maksimovic, Marketing Communications: Contexts, Strategies and Applications, 3rd edition, Harlow, Financial Times Prentice Hall, 2005.
  4. Bhalla, A. Davies, R. Mabugu, M. and Mabugu, R.., Globalization and Sustainable Human Development: Progress and Challenges for Zimbabwe. United Nations Conference on Trade and Development. Occasional Paper. Unctad/Edm/Misc.128, 1999.
  5. Biedenbach, M. and Marell, H.,  Integrated marketing communications in the Australian and New Zealand wine industry, International Journal of Advertising, Vol. 20, No. 2, pp. 239-262, 2009.
  6. Carson, D., and Cromie, S., “Marketing planning in small enterprises: a model and some empirical evidence”, The Journal of Consumer Marketing, Vol. 7 No. 3, pp. 5-18, 1990.
  7. Hill, J. and Wright, L. T., “A qualitative research agenda for small to medium-sized enterprises.” Journal of Marketing Intelligence & Planning, Vol. 19, No. 6 pp. 432-443 University Press, 2001.

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