Entrepreneurial Marketing for SMEs

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1 Entrepreneurial Marketing for SMEs

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3 Entrepreneurial Marketing for SMEs Luca Cacciolatti University of Westminster, UK and Soo Hee Lee University of Kent, UK

4 Luca Cacciolatti and Soo Hee Lee 2015 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6 10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act First published 2015 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number , of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin s Press LLC, 175 Fifth Avenue, New York, NY Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN DOI / ISBN (ebook) This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Cacciolatti, Luca, author. Entrepreneurial marketing for SMEs / Luca Cacciolatti, Soo Hee Lee. pages cm 1. Small business marketing. 2. Small business Management. 3. Marketing Management. I. Title. HF C dc

5 Contents List of Figures List of Tables Preface viii ix x 1 Introduction What is entrepreneurial marketing? Reading guidelines 4 2 The Nature of the Small and Medium-Sized Enterprise What is a SME? A taxonomy of small businesses Factors affecting marketing in SMEs The effect of size Availability of resources Market orientation and marketing intelligence Marketing orientation and business life cycles 20 3 Small Business Owners and Their Environment Two typologies of small business owners Entrepreneurs and owner-managers Entrepreneurial culture and personal characteristics Entrepreneurial orientation Environment and opportunities The external environment: institutional factors affecting SMEs Competitors, suppliers, intermediaries and consumers 40 4 Entrepreneurial Cognition and Learning Entrepreneurial cognition and Kolb s experiential learning Institutions and entrepreneurial behaviour Entrepreneurs adaptation to the environment 49 5 Growth Strategies within an SME Context Factors affecting SMEs business growth Owner-manager s culture 58 v

6 vi Contents Available resources Business-owner personal characteristics Company size and life stage Competition and other marketing constraints The diversity of the drivers to growth Differentiation versus me-too strategies Marketing decision-making and performance: measures available to SMEs Marketing decision-making influencing factors Measures to inform marketing decision-making and to monitor performance 71 6 The Role of Structured Marketing Information in SMEs Decision-Making The relationship between business growth and information use Types, source and frequency of information use Marketing intelligence: SMEs and owner-managers characteristics 94 7 Internationalisation Strategies Internationalisation: enablers, motives and models Enablers of internationalisation Motives of internationalisation Models of internationalisation Internationalisation strategies Value Propositions: How to Build SMEs Offering Understanding the concept of value Segmenting the market Socio-geo-demographic segmentation Demographic and geo-demographic segmentation methodology Classification features Socio-geo-demographic segmentation strengths and weaknesses Psychographic segmentation Psychographic segmentation strengths and weaknesses Behavioural segmentation Considerations on variables selection and on segmentation use 134

7 Contents vii 8.6 Targeting and positioning Targeting Product concept design Levels of product manipulation Types of products Pricing and Distribution Decisions in a Context of Low Distribution Capacity Pricing strategies Distribution strategies Building Brands in SMEs Brands functionality and the branding activity Differentiating function Communication function Relational function The value element of branding Mission statements and consumers experience The importance of branding and branding success factors Why branding is important Success factors in branding Supply Chain Relationships Management: SMEs Partners Different partners... different audiences Supply chain flows Creating value through relationships 178 Notes 185 Bibliography 187 Index 213

8 List of Figures 5.1 SME growth phases, adapted from Chaston Frequency of purchase affecting marketing decisionmaking and performance within an SME context Perceptual map White bread shoppers profiles Value continuum Simple structure of a supply chain Diagram of supply chain flows, adapted from Mentzer 177 viii

9 List of Tables 2.1 EU criteria to define SMEs Factors affecting marketing decision-making and performance within an SME context Sales per customer Repeat purchase Example of rating scale Example of a rating dataset Comparison of customers preferences to our average score 78 ix

10 Preface This book is aimed at explaining key topics and challenges of entrepreneurial marketing in a coherent and logically presented sequence. The topics, represented in the constitutive chapters of the book, are linked to each other according to a specific rationale that satisfies the necessary condition for contextualising the practice of marketing amongst SMEs. The book considers the nature of the SME and the relative institutional effects of the environment in which the SME operates. Therefore, the book truly integrates both entrepreneurial and marketing perspectives of the subject within the same book. Furthermore, all chapters, although linked with each other through a light narrative, critically discuss major issues of entrepreneurial marketing with relevant and up-to-date academic knowledge. All chapters present a set of introductory questions reflecting entrepreneurial marketingrelated problems that the reader is called to reflect upon before reading the chapter. The presence of these questions sets up the base for a critical and engaged approach to reading the chapter. This approach is the foundation of a problem-based learning philosophy which encourages the reader to engage more critically with the subject dealt with. The primary audience of this book are undergraduate and postgraduate students who want to approach the subject of entrepreneurial marketing in a coherent and summative, yet comprehensive, way. Most importantly, this is a book that maintains academic rigour while being reader-friendly. This book was designed to encourage lecturers and students to adopt a problem-based learning (PBL) approach by making use of the information of this book (according to their expertise and creativity) in their classes along with case studies, simulations and critical discussions. PBL is about learning from the solution to specific problems, which also means learning to raise questions, identify problems, structure and deconstruct problems, and finally, solve problems. The PBL approach in marketing sprung up as a reaction to the criticism that marketing graduates were trained in non-integrated curricula whose modules did not reflect the need for training oriented towards problem-solving, was quite static rather than dynamic, and lacked integration with the industry s reality. Hopefully, the book will assist readers in improving their holistic thinking and problem-solving skills. x