Marketing a small business

Small Company (UK Definition)

A company that has any 2 of the following: a turnover of £10.2 million or less, £5.1 million or less on its balance sheet, or 50 employees or less.

Micro-Entity (UK Definition)

A very small company that has any 2 of the following: a turnover of £632,000 or less, £316,000 or less on its balance sheet, or 10 employees or less.

Bolton Report (1971)

Report which initiated discussion on defining small firms based on employees and turnover, varying by sector.

SMEs in the UK Economy (start of 2024)

SMEs (Small and Medium size Enterprises) account for 99.9% of the business population. Approximately 5.6 million businesses.

SME Employment and Turnover in the UK

SMEs account for three-fifths of the employment and around half of turnover in the UK private sector.

Internet Entrepreneurs

Individuals who have rapidly become billionaires by leveraging the internet and technology (e.g., Sergey Brin, Larry Page, Mark Zuckerberg, Jeff Bezos).

ICT Adoption Ladder

Illustrates how business benefits and organizational changes increase as a business adopts more advanced IT strategies.

Entrepreneurial Attitudes to ICT

Positive outlook towards the benefits of ICT, seeking the best available options, and regularly updating ICT facilities.

Successful ICT Adoption

Dependent on owner motivation, skills, growth aspirations, access to resources, positive approach to innovation, close customer contact, and operating in a growth market.

Direct Benefits of ICT

Savings in communication costs, increases in short-term benefits, and secure regular customers.

Indirect Benefits of ICT

Long-term business relationships, potential business opportunities, advertising and marketing, ongoing business transformation, and new business initiatives.

Greiner’s Five Phases of Growth

A model describing stages of business growth: growth through creativity, direction, delegation, co-ordination and monitoring, and collaboration.

Resource - Success

A business obtains resources and becomes profitable maintaining a status quo for growth.

Management style - Success

A business uses both line supervision and staff.

Barriers to Growth

Industry factors, raw materials availability, market size and access, and technology.

Innovation Oriented

Type of entrepreneurial marketing strategy which develops a product and then tries to find a customer (e.g. Dyson).

Bottom Up

Type of entrepreneurial marketing strategy which focus on developing a small group of customers (e.g. local restaurant)

Word of Mouth

Type of entrepreneurial marketing strategy wich provide a good quality of service and rely on recommendations.

Niche Market

Type of entrepreneurial marketing strategy that identifies a niche market that may be too small for large firms.

Product Life Cycle

Type of entrepreneurial marketing strategy which Develop new products and services continuously and Accept that there may be a limited market for some products and services .

Diversification

Type of entrepreneurial marketing strategy which Diversify into new products and services or into new markets.

Entrepreneurial Marketing (Stokes)

Often over-reliant on a limited customer base, have limited marketing expertise, marketing efforts are variable and unplanned, driven by intuition rather than research, customers are self-selected, and often do not focus on all aspects of the marketing mix.

Porter’s Market Entry Strategies

Overall cost leadership, differentiation, and focus.

‘Bottom Up’ strategy

Entrepreneurs identifies possible market opportunities based on their gut feeling about what the customer wants rather than on any formal market research.

Signs of Cash Flow Problems

Overdraft at limit, difficulty in paying salaries, late creditor payments, no working capital, unprofitable business, and tax arrears.

the 80/20 Rule

This states that 80% of the effort goes into producing 20% of the results.

Break Even Point

Point at which the company is neither making nor losing revenue.

Pricing

Pricing is based on considering costs, the market, and desired profits.

The Cash Crunch

Strategies to manage cash shortages: bartering, negotiating with banks/creditors, cutting costs, using credit cards, and zero-based budgeting.

Amar Bhide on Starting with Limited Funds

Get operational quickly, look for quick break-even, cash-generating projects, offer high-value products/services with direct personal selling, and focus on cash.

Equity

Invested by shareholders/owners/retained profits; investors expect an increase in share value and dividends.

Types of Equity Finance

Seed finance, start-up finance, finance for expansion, replacement capital, buy-in/buy-out finance.

Venture Capital

Equity capital in unquoted companies with growth potential.

Business Angels

Provide hands-on support and strategic management, investing less than £100,000, looking for capital gain.

Members' Voluntary Liquidation

Shareholders decide to put a solvent company into liquidation because there are enough assets to pay all the debts.

Creditors' Voluntary Liquidation

Shareholders decide to put an insolvent company into liquidation because there are not enough assets to pay all the creditors.

Compulsory Liquidation

The court makes an order for the company to be wound up, usually on the petition of a creditor.

Possible Reasons for Failure

Poor Capital structure, Management team, The economy, Customer diversity, Financial management, Owner attitudes, Rising costs.

Harvesting Goal (Timmons)

Having a harvesting goal and crafting a strategy separates successful entrepreneurs; adds value to the business.

Contraction Strategy

Reduce size of the business by Cutting costs and laying off staff.

Stability Strategy

It is a passive approach aimed at staying the same and maintaining income.

Growth Strategy

Expansion, which includes increase sales and improve profitability.

Survival Strategy

Restore profitability, improve cashflow, improve competitiveness and sale.

What are some aims of a lecture on marketing in a small business?

To cover marketing in a small business, an entrepreneurial approach to marketing, market research in a small business, marketing strategies for small businesses, and promotion and advertising.

Who is Sara Blakely?

The founder of Spanx, who became one of the youngest female self-made billionaires in the world.

What initial action did Sara Blakely take to create her product?

She cut off the feet from a pair of tights.

What was important to Sara Blakely's success with Spanx?

Her sales background.

How did Sara Blakely initially secure her first account?

She cold-called Neiman Marcus and pitched the product idea with a before and after demonstration.

What major event significantly boosted Spanx's sales?

A recommendation from Oprah Winfrey on her 'Favorite Things' show.

What is the purpose of the Sara Blakely Foundation?

To help women with entrepreneurial training.

How much of her own savings did Sara Blakely invest to start Spanx?

5,000 dollars.

What did Sara Blakely do to keep overhead costs low when starting Spanx?

She did everything herself, including marketing and designing the packaging.

What was Sara Blakely's approach to Spanx product development?

She invested only $5,000 of her own savings to start the business, and kept overheads low by doing everything herself including marketing.

What are some marketing strategies for small firms?

Innovation-oriented, bottom-up strategies, interactive marketing/word of mouth, informal networking and information gathering.

According to Collinson and Shaw (2001), what characterizes entrepreneurial marketing?

A quick response to changes in the market and the ability to predict changes in customer needs.

What does informal market research involve, according to Collinson and Shaw?

Collecting information about customer requirements on a daily basis from customers, suppliers, professional advisors, and other businesses.

What marketing issues might a growing business face?

An over-reliance on a small group of customers, which can adversely affect the business if some of these customers are lost.

According to Stokes (2000), what are common traits of entrepreneurs in marketing?

Over-reliance on a limited customer base, limited marketing expertise, variable and unplanned marketing efforts, and an intuitive interpretation of customer needs rather than formal research.

How do entrepreneurs often view marketing?

As an activity to attract new customers, with a focus on sales and promotion and reliance on informal techniques like word-of-mouth recommendations.

What is a common product development approach for entrepreneurs?

They often develop a product or service and then try to find customers.

What are some entrepreneurial marketing strategies?

Developing a product and then trying to find a customer, focusing on developing a small group of customers, providing a good quality of service, and relying on recommendations.

What are the characteristics of 'Innovation oriented' marketing?

New product introduction, high costs due to inexperience, unpredictable demand, unknown competition, no product loyalty

What is the basis of market opportunities in a 'bottom up strategy'?

The entrepreneurs’ gut feeling about what the customer wants rather than on any formal market research.

What are the advantages of a 'bottom up' approach?

It’s flexible and needs fewer resources.

Why is 'Word of Mouth' marketing important for small businesses?

It can have a significant influence on customers’ purchasing behavior and is a relatively low-cost approach.

What is the disadvantage of 'Word of Mouth' marketing?

The entrepreneur cannot control the message.

What is Niche Marketing?

Finding a gap in the market, creating barriers to entry through customer loyalty, identifying unique benefits of goods or service to customer

What are Diversification Strategies?

Diversifying into new products and diversifying into new markets

What are Porter’s market entry strategies?

Overall cost leadership, Differentiation, and Focus

What is Mission statement?

What kind of business are we in?

What should Mission Statements be?

Realistic, Achievable, and Brief

What does Market Focus imply?

Need to research particular segment and Determine the need for your own product or service

What was Innocent's market research?

They had two large dustbins, one had a YES and the other one had a NO on it and they asked people to put their empty bottle in the bin that they agreed with

What is the purpose of market research?

Build Build credibility i.e… prove that there is market for the product and Develop Develop realistic market entry strategy for new business • understanding customer needs

What questions should a marketing plan address?

Who are your customers, who are your competitors, should the products be tailored and what are the future developments

What does Market Research entail?

desk research - use published information; field research - collecting specific information e.g… questionnaires, market surveys

What does Market segmentation entail?

Geography, Demographics, Psychology and Behaviour

What does Market entry strategy start with?

Starting point - customer. customer needs - how to satisfy them

What should a Business Name indicate?

Who you are, What you do and How you do it

What are the elements of Creating a successful brand?

Quality, Excellent service, Innovation and Differentiation

What are the advantages to Brand extension?

Easier to launch a new product using an established brand. Customers already aware of the brand and entrepreneurs can spend less on promotion

Why was the name Moonpig a good choice?

Catchy and memorable, Only two syllables –easy to remember and Phonetic so it was easy to spell

What is important with the moonpig.com domain?

Control of domain name very important .com and .co.uk which was important; Moonpig is unique – only reference in Google is on website; Registered Moonpig as a trademark in the UK and US to stop people copying

What are some Marketing strategy considerations?

Customer needs , Quality of the product, Convenience to the customer, Customer service and Price to the customer, payment terms and discounts

What are some conclusion about the marketing strategy?

Niche or focus • Product or service features and benefits • Market research • Innovation and ‘bottom up’ approach • Word of mouth • Promotional material • Distribution and Selling methods