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Marketing and Small-Medium-Sized Enterprises (SMEs): Researching Current Trends, Possible Futures

Vanessas 3 | -   Freelance Writer
Dec 05, 2017 | #1
Despite the seeming large-scale corporate takeover of the world's businesses, the reality is that small and medium-sized enterprises (SMEs) and entrepreneurial ventures (henceforth known as "EVs" in this essay) are still an integral part of the economies of most nations. "In the USA, 98 per cent of businesses have fewer than 100 employees, while in Denmark the figure is 97 per cent. SMEs comprise 99 per cent of UK businesses.Thus, it is critical for leaders and managers of SMEs and EVs to understand the various marketing and promotional tools at their disposal, not just because they are competing with the "big boys," but also because they are competing with each other, both nationally and, increasingly, internationally.

However, the primary marketing challenge facing SMEs and EVs as compared with larger corporations is the lack of a large marketing budget. Given the ubiquitous nature of SMEs and EVs, particularly those that seek a presence in the Internet marketplace, it is critical for leaders of such organisations to understand the various marketing (promotional) techniques that fall within their budgets.

This essay will examine and analyse the current research into marketing as performed by SMEs and EVs: how strategies have evolved, which ones work, and which ones do not. To do so, first a broad overview and analysis of current and evolving marketing strategies for SMEs and EVs will be presented. Next, case studies will be discussed to illustrate the points made in the literature review as well as to support the thematic analysis. Finally, conclusions will be reached as to the general themes discovered in the process of the review of current literature, and what implications this might have for the future of marketing for SMEs and EVs.

Marketing for SMEs and Entrepreneurial Ventures: Current and Evolving Strategies


Small Business ResearchIn terms of current marketing strategies for SMEs and EVs, branding stands out as one of the most important, and most effective.

Company differentiation [for SMEs] cannot be achieved purely through classic economic ingredients such as advertising, sales force effort, changes to product design and product differentiation... Therefore, managers must optimise the brand value chain rather than the product value chain.(Lassen, Kunde & Gioia 2008: 96)

A full discussion of building a brand is beyond the scope of this essay; however, it is common knowledge that a strong brand is key to any company, regardless of size; and there are specific marketing techniques that SMEs and EVs can use to bolster and communicate their brand image. One of these is corporate social responsibility, or CSR. The authors note that communications about same are critical in brand-building, which is a challenge due, in part, to managers' unwillingness to participate in "forced marketing and branding exercise[s]" (83), as well as to budgets that regulate the extent to which internal affairs can be made known to the outside world.

Nevertheless, given the importance today's consumer places upon ethical business practices in light not only of the "greening" of the marketplace, but also as a result of hearing one too many Enron-like stories, it is important for companies to adhere to high standards regarding CSR as well as find ways to communicate same to consumers.

Juntunen, Saraniemi, Halttu, and Tähtinen concur with the importance of effective brand-building for SMEs, and describe a three-stage approach to same. The pre-establishment phase concerns defining the corporate personality before the company is officially formed (122); the early growth stage involves establishing the personality through brand planning, creating a corporate image, and ensuring employee "buy-in" (124); and the effective growth stage is about maintaining and further evolving the brand in light of consistent analysed feedback (127). At all stages, communication about brand-related matters is seen as critical.

Thrassou and Vrontis also address the importance of marketing communication for SMEs and EVs. They stress how critical it is that SMEs and EVs do not adhere to the research into marketing that has been based upon, and geared toward, larger firms, not just because of budgetary constraints, but also because the very nature of the businesses are different and thus demand different marketing approaches. Here we see another instance in which traditional marketing strategies are evolving to better suit the SME and EV. Thus, marketing communications for SMEs and EVs should focus upon, for example, personal communications, quite often ideally by the owner or manager himself or herself; obtaining referrals from current clients and reaching out to them personally; and ensuring that all communications are focused. These strategies recall Nielsen & Thomsen, in their findings that specific communications regarding CSR are critical to build brand.

As will be seen in the two case studies presented later, brand building is quite important for SMEs and EVs (as for firms of all sizes). The difference here is that because SMEs traditionally lack the ability to conduct extensive advertising campaigns and other traditional marketing strategies, they rely upon alternative means to promote awareness of their companies. Strategically creating and building a brand over time, and communicating about that brand (defined broadly to include such parameters as corporate social responsibility) to the various stakeholders (customers, suppliers, etc.) will, over time, be key to the success of the SME.

Relationship Marketing

Relationship marketing is increasingly utilised by SMEs and EVs as more traditional marketing methods (e.g. targeted advertisements, pricing strategies, and the like) are usually not relevant:

An important aspect of marketing in SME's is the central role of relationship marketing. .... Indeed, Zontanos and Anderson go further and suggest that it is difficult to disentangle or even to distinguish the practice of relationship marketing from entrepreneurial action... (Rowley & Spiezia 2006: 259)

Copley echoes this finding and notes that the evolution of marketing in SMEs from more orthodox to more relational strategies makes sense, given the necessity of owner/entrepreneurs to wear "many hats" (364) as they grow their businesses (i.e. with rare exceptions, start-ups at the SME or EV level cannot afford to hire marketing personnel, payroll executives, public relations staff, and the like; it is, quite often, the case that the originator of the firm is the one handling these and other aspects of managing and running a business, definitely in the beginning and often through the course of the company's existence, depending upon how quickly and efficiently the firm grows). Copley has also found that in SMEs, the traditional "4 P" marketing mix (product, price, place, and promotion) approach is present, but generally in the background as opposed to the primary plan, which makes sense given that smaller firms tend to grow more "organically" and perhaps not as linearly as larger firms, thus rendering it almost absurd to place primary importance upon as rigid a plan as a "4 P" model (364). Relationship-building, then, is a large part of this organic growth process.

McLeay and Andersen and Barnes, Chakrabarti and Palihawadana focus upon the importance of relationship building to SMEs and EVs involved in any kind of international trade. As Barnes, Chakrabarti and Palihawadana note, "[R]elationships need to be nurtured particularly in times of economic change, where globalisation and de-regulation are forcing more firms to compete internationally" (2006: 220). To forge such relationships, international travel is seen as key, as face-to-face interaction can foster trust in the ability of the firm among potential customers (in their case, the state of Montana as it represented a group of artists there). When that is not economically feasible, it is, of course, still possible to create and nurture such relationships; but the key point here is that especially when dealing across national boundaries (as increasingly is the case), SMEs and EVs need to consciously focus upon relationship building as a way to increase brand recognition, attract and retain customers, and establish legitimacy on a global scale. Piercy (2009: 551) reinforces the importance of excellent customer service that crosses international boundaries; and while his work involves the relationship between the marketing and operations "departments" of online retail businesses, his point is still salient given the enormity of competition among online retailers (and thus the need to distinguish oneself from the group).

Harrigan, Ramsey, and Ibbotson examined businesses in light of their efforts to implement relationship marketing (what they called "customer relationship management" or CSM) through "internet-based technologies," or IBTs (503). They studied 1445 SMEs and found that the majority of them are implementing what they term "e-CSM," or online marketing strategies to boost relationships with customers. What is interesting about this study is that the IBT methods used to cultivate these relationships are not the same as those used by larger firms, which suggests, yet again, that SMEs find their own "twists" on traditional-style marketing approaches. In this case, the majority of SMEs surveyed were using quite simple IBTs, yet they were finding them effective to "create competitive advantage in their own way" (503). Such simple techniques are, quite often, a part of relationship building.

However, as Redondo and Fierro note, relationship-building is far more than the payment of a social call. The educational level of managers, owners, and others seeking to build relationships with consumers, vendors, distributors, and so forth is an important (and often overlooked) aspect of the success of relationship marketing. The authors specifically studied those relationships between purchasing managers and vendors, but the results can be extrapolated easily to extend to all relevant relationships, if only because communication skills are greatly enhanced when the communicator possesses a relatively high educational level.

It is also the case that the relative success or failure of relational marketing is connected to perception. De Clercq and Rangarajan studied "perceived relational support," or PRS, among 217 entrepreneurs in Western Europe (they did not disclose the exact location), defining "PRS" as "the extent to which entrepreneurs perceive that they receive support from their customers" (673). They found a correlation between the amount of perceived support from customers and the reciprocal support that came back to the entrepreneurs, and that this support went "back and forth" in a sort of feedback loop. In other words, there was an affirmation that relationships in relationship marketing, at least in EVs, is reciprocal -- it is interactive and non-static, dependent upon both parties for success (or failure). This makes intuitive sense, as common wisdom holds that all relationships are two-way streets; however, it is instructive to note that this is the case in the context of marketing as well.

As Altinay and Altinay found, relationship marketing is used across ethnicity; their study of 227 Turkish small business owners in the UK found that they heavily utilise relational approaches to marketing. Some might argue that, in fact, many non-Western cultures have always been far more relational in their marketing strategies, and that is indeed what this study found: "Ethnic minority businesses recognise the importance of social ties in the development of business relationships both with the co-ethnic and mainstream consumers" (1189). Of course, as this section shows, relationship marketing is not solely the domain of ethnic minority business owners; however, it is interesting to see empirical confirmation that, when entering the so-called Western business model, relationship building is carried right into the marketing strategy.

Fillis found this to be the case with Celtic ethnic minority business owners as well. He notes that Celtic business owners, for the most part, are not afraid to network; they are not afraid to be "informal" and allow relationships to grow (or not), as they will, in keeping with the organic approach to building an SME that seems to span so many ventures. However, he takes things a step further:

Focusing on softer, qualitative Celtic dimensions, such as networking, word-of-mouth marketing, building and sustaining relationships, opportunity recognition and the importance of reputation of the business and of the owner/manager as a form of branding are equally, if not more, important factors than the formal processes of Saxon marketing planning and strategy. (Fillis 2007: 15)

In the context of a discussion about promises, Little, Motion, Brodie and Brookes discuss the vast importance of relationship marketing to SMEs. It makes sense that promises are seen as part and parcel of the relationship-building process; it is in large part that through promises kept, trust is established, and trust keeps customers coming back. The marketing strategy involved in this "promise" perspective is more complex than that -- it involves four discrete activities [making promises, keeping promises, enabling promises, and realising promises (26)] -- but the basic idea is that by building an infrastructure that enables promises to be made and kept, customers keep returning, especially when intent-driven attention is focused upon the maintenance of the relationships that are built. The goal is to forge long-lasting relationships, even when acknowledging that some will need to "go by the wayside" is they are deemed unprofitable for the firm (30).

Networking is a variant upon relationship building, and is increasingly seen as a valid form of marketing for SMEs and EVs who generally don't have large marketing budgets, and are generally operated by owner/entrepreneurs who may or may not have specific marketing knowledge. Networks (social and/or professional) are built up over a period of years, and cultivate a great deal of trust on the part of all parties when done correctly. Thus, networking in itself is a relationship-building activity, but carries an added dimension in that s are often established without an immediate agenda, but with the assumption that some day, in some way, said will be helpful to the SME. One negative side of networking is that such networks can be intensely personal, cultivated and created over years by one individual who may be loathe to "hand over" his or her s to others in the SME; another is that not everyone has the social skills (or desires) to pull off networking, even when they can cultivate perfectly reasonable relationships with customers in the context of doing business.

Social networks were also found (perhaps unsurprisingly) to be correlated with the success of start-up social ventures in Israel. In fact, social networks were found to be a critical aspect of the actual capital that was usually needed to start an entrepreneurial venture (in line with findings in previous literature, e.g. Baron & Markman, 2000; Burt, 2000; Davidsson & Honig, 2003; Johannisson, 1996; as cited in Sharir & Lerner 2006: 13). In other words, not only were social networks helpful to the success of these ventures, but they were found to be instrumental, in part because the networking provided a vital foundation, much as cash does, in the beginning of the venture.

Eng and Spickett-Jones found an interesting connection between marketing communication and networking among SMEs, while they also found that conventional marketing communication strategies (as well as other traditional marketing techniques) were not necessarily applicable to the SME for all of the reasons discussed thus far (case flow, limited people power, and so forth). The interesting finding was that the communication and relationships that seemed to work for many SMEs were those fostered between SMEs.

For SMEs, with their limited resources, the implications are clear: cooperation over resources may enhance the mutual position of enterprises. This type of
interdependence may require levels of trust found more easily in business relationships where commitment, motivation and interpersonal are strong,
like SMEs.... Given the potential significance of relationships for SMEs and the motivation 'to network', a network model may help provide a more insightful level of strategic analysis than conventional approaches alone yield.

The implications are quite interesting. Eng and Spickett-Jones note that the relationships within a given network of SMEs vary over time and according to the level of cooperation involved; who has more power and when; and what role any given SME plays in the network. Again we find this same sort of organic growth process that seems to be a hallmark for so many SMEs and EVs. As the authors point out, it may appear that SMEs have no strategic long-term marketing plans, but instead go from sale to sale, working to maximise each one; but while that may be true to some extent (and/or for some SMEs more than others), the reality is that another kind of marketing mix is at work here. Growth is organic, not limited to following a linear plan funded by ample capital; opportunities arise as they arise, and are (ideally) taken advantage of in a limber fashion.

The findings of O'Dwyer, Gilmore, and Carson concur with Eng and Spickett-Jones in that they feel that strategic alliances among SMEs who are competitors can be of great benefit to all. Pointing out that this in itself is an innovative marketing strategy -- this "colluding with the enemy," not with a nefarious goal but with the true intent to share resources and help in other capacities -- the authors note that such alliances represent yet another dimension of "relationship marketing." This is highly interesting, and bears watching to see if, over time, such alliances help or hurt on balance, and whether or not this strategy continues and spreads, or dies out for lack of either trust that it will work (competitors do not, by and large, trust one another) or for lack of effectiveness in the long run.

Innovation and Flexibility

One of the running themes through this discussion has been the need for SMEs and EVs to eschew traditional marketing techniques and embrace more flexible, more organic, ones such as relationship marketing and alternative brand building. Innovative marketing is another current approach to marketing choices for SMEs and EVs. In fact, O'Dwyer, Gilmore, and Carson call innovative marketing "fundamentally important for SMEs" (383), due to a variety of factors including "poor cash flow, lack of marketing expertise, business size, tactical customer-related problems and strategic customer-related problems" (383).

But what is innovative marketing? O'Dwyer, Gilmore, and Carson, calling upon previous research, note six aspects to innovative marketing: "marketing variables; modification; customer focus; integrated marketing; market focus; and unique proposition" (384). Marketing variables include product enhancement (incremental change as opposed to radical change), variation upon the traditional marketing mix, and finding alternatives to traditional distribution channels in an effort to save both time and money (385). Modification refers to being both proactive and embracing change -- that is, being flexible when necessary (385). Customer focus is another way to express relationship marketing, which the authors note is critical for the success of SMEs (386). Integrated marketing is based upon the premise that whatever the SME is doing, marketing-wise, that particular "thing" permeates all marketing activities; in other words, everything is connected, and at the same time doesn't have to follow a set script (385). Market focus includes vision, being profit-focused, and being market centred, meaning that SMEs that employ innovative marketing techniques are able to exploit changes in the market with greater agility than their larger competitors (386). Finally, unique proposition is simply another way to say that SMEs that wish to have a growing presence rely upon that which is new; that which is innovative and unconventional in terms of products and services (386-387). Finding (or creating) niche markets by being willing to risk uniqueness is one way for SMEs to flourish.

Innovation in itself can be a double-edged sword, however, warns Fillis. He argues that innovation that is solely profit-driven risks drowning out something far more important: true creativity (14). Advocating for his Celtic-style approach to entrepreneurship, Fillis points out that by carving out the space to be creative, innovation (in the more business sense of the word) will come eventually, as the pressure to "create" something new and unique will not stifle truly innovative and interesting ideas. He has a good point here; one of the strengths of the SME is its small size and concurrent willingness to take risks. Indeed, without the flexibility inherent in risk-taking, SMEs and EVs might well struggle even more mightily against their larger competitors, as one of their advantages would be lost. Thus, encouraging true creativity in the quest for innovation is something SMEs might well wish to cultivate as part of their marketing plans.

Crick in his study of 448 UK SMEs in a variety of industries -- all firms that decided to internationalise -- found that flexibility served them well on balance. "[M]anagers employed different strategies in particular countries and these changed over time to meet broad but flexible objectives. It can therefore be concluded ... that managers' sources of competitiveness vary in the context of the strategies employed" (407).

On the other hand, having a plan is another important marketing strategy for SMEs and EVs. In their study of growth and profitability among 1691 Welsh SMEs, Foreman-Peck, Makepeace, and Morgan found that having a marketing plan was critical to both. As self-evident as this may seem, it is instructive to note the organic growth process followed by many new SMEs and EVs. While they are not necessarily as casual as "let's have a show in the barn" (to paraphrase Mickey Rooney's famous words), small start-ups often begin in a rather haphazard fashion; to assume that all have carefully crafted business plans, let alone marketing plans, is fallacious. Thus, a marketing plan not only helps start-ups chart their course, but the mere existence of same indicates a level of commitment to the firm.

Case Studies of Marketing the SME and Entrepreneurial Venture

Montana A/S (a Dutch furniture manufacturer specializing in shelving) is a clear example of how clear, proper branding is an effective (and critical) marketing strategy for SMEs. Montana A/S was quite successful until the late 1980s, when three issues caused the company to stagnate; the two that are relevant to this discussion are confusion over product offerings and an unclear brand profile. Confusion arose in part because of the plethora of offerings; customers were told they could customise their shelves, but they were unclear as to how to do this, and the promotional materials that had been created were ineffective at communicating how this was possible. Tied into this issue was that of improper branding; customers were told that Montana A/S was the leader in its field, but because the brand did not convey this, customers rightfully could not see how the company was any better than the numerous "do it yourself" options that existed for far less money.

To correct these issues, Montana A/S embarked upon a rigorous brand-building process to take them from "shelf builders" to "shelf gods," as per Kunde's concept of brand religion:. The idea is that one begins with a product and then, to attain "ultimate value positioning" in the market, one must work to ensure the brand is not only "so strong in the eyes of the consumers that they become equivalent to the function they represent," but that "their belief in the brand is akin to a religious belief" (Lassen, Kunde & Gioia 2008: 97). How did they accomplish this? They created a marketing plan that followed these core steps:

(1) Identify the brand essence (the brand's value, culture and personality).
(2) Focus on the right target group.
(3) Select the right media.
(4) Devise a consistent concept.
(5) Keep all communication consistent and continuous.
(6) Renew the brand over time, but leave the core unchanged (Lassen, Kunde & Gioia)

None of these things costs a huge amount of money; but all of them require a clear, consistent focus upon brand-building, following a concrete step-by-step plan. It worked for Montana A/S -- between 1991 and 2007, sales increased almost 300%.

Rowley and Spiezia present another case study of an SME that effectively utilised a variety of marketing strategies to position itself well in the niche market of organic personal care items. Reminiscent of Foreman-Peck, Makepeace, and Morgan's findings that having a marketing plan is critical to the success of an SME, Spiezia Organics first identified its product line, which effectively identified its competition (other ecofriendly, organic personal care production companies) as well as its customer base (women) (255-256). Having done so, both the name (using the word "Organic") as well as the logo (incorporating nature-based themes into the graphic design) were carefully chosen so as to attract attention in a relatively new, yet already well-populated industry. Thus, from the beginning, the brand was created consciously (branding being a critical aspect of marketing for SMEs).

Marketing communication via advertising (both in magazines and business-to-business) was also conducted from the beginning, and once a website was established, this enabled another piece of the puzzle, so to speak (259). Relationship marketing was also critical, both in terms of the supply chain (building strong relationships with suppliers and vendors has greatly assisted in word-of-mouth advertising) and with customers; in fact, the authors note that "[t]his case study confirms the centrality of relationships to the marketing of SME's" (261). Finally, innovation (second only to customer needs in terms of marketing priorities) is a key component of Spiezia Organics.

However, it must be noted that all of these things -- from brand positioning to innovation -- were not conducted according to a well-thought-out plan that was crafted from the beginning. Rather, they were "borne out of a very sound understanding of their product and market, and [were] honed very carefully" (261) as matters proceeded, as it were. In other words, this successful SME followed the course of others in the sense that it grew organically, in line with the principles of relationship marketing in particular, and also of being willing and able to be flexible and innovative, even as efforts were made to grow a consistent brand. This "disjointed" progression of events, Rowley and Spiezia note, can often make outsiders conclude that many SMEs have no marketing plans, even for the short term (261), and they do believe that had Spiezia Organics had a marketing plan in place from the beginning, one that included an adherence to the principles of relationship marketing, some missteps might have been avoided. However, again, this is the nature of many SMEs, arguably most of which are begun and operated by one or a very few individuals who must attend to all aspects of a business from production to operations to customer service to marketing; thus, once again, it can be seen that this relational approach works well in SMEs that have limited people-power and (most likely) limited capital, especially in the beginning, because from this base of strong and lasting relationships can come further growth.


There are several themes that have run through this discussion of current marketing techniques and trends as utilized by SMEs and EVs. The first, and arguably the foremost, is that SMEs are in many ways redefining marketing. So much previous research and other attention has been paid to the marketing strategies of larger firms that SMEs have either been neglected or seen to sort of haphazardly throw things together, hope they work, and, if so, then (and only then) devise some sort of marketing plan. While this statement is a bit exaggerated for effect, the point is salient; SMEs are typically seen as less organized, in terms of their marketing strategies, than larger firms.

Of course, it is true that the average SME lacks the budget of larger companies; and it is also true that many SMEs and EVs are started by one or a few people, all of whom need to, collectively, handle all aspects of the business, from inventory (if applicable), hiring (also if applicable), licensing, sales, and everything else. If marketing falls by the wayside, or becomes secondary to the seizure of short-term sales opportunities, it is understandable. Nevertheless, it is not the case that no marketing strategies are being performed by SMEs. The reality is that they just tend to present differently than do those conducted by larger companies.

Perhaps the most widespread marketing strategy utilised by SMEs and EVs is relationship marketing (aka relational marketing). Whether this is done informally, deliberately, or with a combination of the two, relationship marketing helps SMEs almost across the board build their businesses (when done properly, of course). It is these early relationships with customers, suppliers, and others (including, increasingly, other SMEs) that helps them build a base of support, and move forward into the future. Hand in hand with relationship marketing is networking; long a "standard" of all companies, large and small, with SMEs and EVs, it is a virtual prerequisite (and, for some, a form of capital). Networking even among SMEs (as in, networking with competitors) is also a way to share resources that alone, none would have the opportunity to obtain.

Building brands is also critical for SMEs and EVs. With a strong, consistent brand image being formed and put forth, SMEs can begin to stand out from the crowd, target their customer base, and again, build a foundation upon which to grow. Innovation and flexibility are also hallmarks of SMEs, if only because they are both positioned to, and also need to, take advantage of opportunities in a more limber fashion than the larger firms as a way to move up; only by being flexible can this happen. And while marketing plans are certainly smart, and desirable, the reality is that "invisible" plans do exist even when it seems that SMEs are being "flexible" to the point of chaotic.

In all, if one was allowed just one word to describe the current (and most likely future) marketing trends of SMEs and EVs, it would be "organic." Given that this is how the internet is often described, and given that SMEs and EVs are increasingly making their presence known online, this is also a quite fitting word. Now that more research is being conducted into SMEs and EVs, we will have the chance to find out of this is accurate.


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