Adoption and Barriers of Marketing Strategy by Small Businesses

Critical Analysis of the Adoption and Barriers of Marketing Strategy by Small Businesses in Ghaziabad, India.

Jatin Sachdeva Higher Diploma in International Hospitality and Tourism Management HTMi Switzerland

Introduction The research is to find out the awareness and barriers of marketing on small business in Ghaziabad, India. There are varieties businesses in Ghaziabad. There are many hotels, retail shops, flower shops etc. These small business owners may be are not aware of social media marketing or maybe they don’t have enough knowledge about that. The traditional way of marketing need to be removed which makes it important to research about this topic. People mostly talk about businesses in the context of big business rather than small, even though small businesses make majority of the economy of the country (Tyagi, 2012). Small businesses need to be recognised more as an advantage to the country. Many researches and books have been written regarding the small businesses but still there is a knowledge gap that needs to be researched. It is important for any business to use marketing effectively to grow and earn profit. Even the small businesses require using marketing. But there is barriers regarding the concepts of marketing in the mind of the owners. This study focuses on the small businesses and there believes regarding marketing. It shows the theory regarding the reasons of starting a business. It shows the concepts and principles of how small businesses operate. According to El-Gharry (2012), after the global recession small businesses helped in over coming the recession as it helped in the economy of the country. Small businesses are considered to be really helpful. There have been few researches done about small businesses regarding Internet adoption but there is not enough research done specifically on barriers of marketing concept for small businesses. As the author is actually interested in Marketing and have experienced that small business in Ghaziabad, India, don’t market their product or service.

They might have a prospective of looking at this investment as a waste of money. So, this made the author to think about how to aware about adoption and barriers of marketing especially in his city Ghaziabad, India. The author wants to change the prospective of the owners of small business and make the businesses understand the importance of marketing. According to the author, small businesses can become big with effective way of marketing, which is strongly supported by Tyagi (2012).

Small business- Definition and Concepts Definition of Small Business The public often talks about business and thinks about big business, but there are different types of business. According to Bridge et al. (1998) found that there are four different types of businesses: a) Micro business (0-9 employees); b) Small business (10-49 employees); c) Medium business (50- 249 employees); d) Big business (over 250 employees). On contrary, SBA (small business administration U.S.A., 2013) states that small businesses are concerned with the independently owned and operated business; the number of employees depends on the type of small business. The Companies Act (1985, Cited in Bridge et al., 1998) stated in section 249 that a company, which will satisfy three criteria, will be known as a small business. Three criteria are: firstly, turnover should not be more than $2.8 million; secondly, total of the balance sheet should not be more than $1.4 million and lastly there shouldn’t be more than 50 employees. So, the author would like to mention that there is no clear, specific, or universally accepted definition for small business that is strongly supported by Bridge et al. (1998).

Strategies, Costs and Benefits of Small Businesses Surprisingly, big businesses as well as small businesses use same principles to run the business (Mariotti and Glackin, 2010). Nevertheless, there are completed different ways of operating a small business compared to a big business. Most of the big business starts at a small-scale i.e. small business. Small businesses are considered to be the engine of our economy. It helps in creating wealth, jobs, and improves the standard of living in the country (ibid). Small businesses are able to provide useful services that are not provided by big businesses- Specialised service, local service and personalised service (Perry and Pendleton, 1983). Examples for specialised services would be medical shops, boutiques, and printing shops. These specialised services are not provided by a big business because of its large scale run. Local services in suburbs can provide cheaper services compared to a big business for example corner shops. Personalised services are really important for customer satisfaction (Swarbrooke and Horner, 2007). These services are offered by small businesses, as they are able to know the customer and their needs. Often customers are called by their names. Mariotti and Glackin (2010) express that to start any business all costs and benefits should be taken in consideration, which is even strongly supported by Lee-Ross and Lashley (2009). It is regardless of all the push or pull factors in figure 2.1. Costs for running a small business include financial insecurity, obstacles, long hours/hard work and risk of business failure. For small business finance is a big issue especially if it’s related to manufacturing, as machinery is required to produce goods. Obstacles can be of different varieties as depending of type of business and location.

Long hours and hard work is required out of a small business owner if he/she wants the business to be durable (Stokes and Wilson, 2006). To contradict, Singhapakdi et al. (2010) states that costs mentioned above for small businesses are similar for big businesses. Costs mentioned are considered to be general for any size of business. There are benefits providing positive motivation for an individual to start a business. Individual as owner is independent of taking all the decisions for the business that keeps them out of the box and help them create/innovate. Independence leads to self-satisfaction, as owner is free to use skill/hobby/what you love to do in his or her own business. Financial reward leads to self esteem i.e. knowing that you created something valuable giving strong feeling of achievement (Mariotti and Glackin, 2010). Comparison of costs and benefits for making a decision is known as cost/benefit analysis (ibid). Cost/benefit analysis helps in making better decisions for a business. To criticise LEE-ross and Lashley (2009) states that emotional factors may overwhelm the point, which make costs stronger than benefits or vice versa. Theoretical Application

Figure 2.1 “Reasons for setting up in business” (Burns, 2001, 71)

Figure 2.1 explores how to start-ups of a business happens and factors behind a start-up of a business. Majority of the people, at some point of time, get an idea to start up their own business at a small scale. But only few people are able to do so. The reason behind that they don’t have a trigger to start. The trigger as shown in the figure 2.1 represents ‘push’ as well as ‘pull’ factors. Push factors reflects the reasons that forces to start-up. The push factor could be unemployment and strong motivation of self-employment, disagreement with boss or management by the way of doing business, does not fit into company as can’t listen to orders given by management or simply there is no other solution for example there might be any disease to a person or physically disabled. The growth of any business is likely to happen with the help of pull factors, which is also known as positive motivation (ibid). Pull factors might include the need of independence, achievement and recognition, personal development and wealth. Trigger comes with some blockage, which varies from person to person. Blocking is commonly divided into four parts- needs for a fixed or regular income; time to support the family, no capital and not enough confidence on ability. If individual is able to cross all the blocks and have confidence on their ability, he/she has entered the stage of action and start their small business.

Small Business and Marketing Successful business needs to have effective marketing and market research. According to Jobber (2010) marketing research is required before marketing. Market Research includes knowing the needs and wants of the customers and executing the product or service accordingly.

“Marketing is the art and science of finding, retaining and growing profitable customers” (Kotler et al., 2010, 11). After the market research, it is important to market the product and services. Small business has not been successful in the adaption of marketing concepts as stated by Singhapakdi et al. (2010). But marketing managers are more challenged in small businesses compared to big businesses as managers of big businesses thinks that their work is less important (ibid). According to Sadowski et al. (2002) small business owners consider marketing to be misuse of resources and invaluable. Even E Marketing which is low-priced or free according to Scott (2010) is considered to be irrelevant by small business owners. There is a barrier that is established between the owners and the marketing concepts. Owners don’t have enough information regarding to pros and cons of the marketing/e-marketing. To contradict, El-Gohary (2012) states that UK and Egypt small business understands the benefits of e marketing and desire to use. Highly educated worker prefers to work at big rather than small business. That’s the reason UK and Egypt owners still not using marketing. This is a free method to advertise products or services of the business (Weinberg, 2009). Small businesses don’t take huge risk of investing in money for marketing, as they are not sure of the return. According to Klein (2013) small business started to invest money in social media marketing as they believe that cost is nominal like Facebook, twitter etc. They strongly believe that customer’s online can helps them in analysing and improving the product or service.

Small Businesses- Importance of Adoption of Internet Small businesses are trying to always compete and innovate to be successful. Small businesses have been considered for increase the economy of the country (Barringer and Ireland, 2010). There are many existing research regarding small business, marketing small businesses and Internet adoption by small businesses. Dimitrijeva and Batraga (2012) founded that local small businesses are more influenced by the manufacturing rather than marketing. Marketing is still not productive for Latvia’s small businesses, the reason being insufficient knowledge. According to the finding by Mehrtens et al. (2001), small businesses are adopting Internet as they tend to seek the benefits out of it. The key finding says that it makes it easier for small businesses to grow through Internet by getting more customers online. Sadowski et al. (2002) founded that small businesses considers Internet as an opportunity as mentioned above as well. But mostly small businesses would like to use the method of “wait-and-see” to confirm the productivity. This will help in deciding if it is value for money or no. Walczuch et al. (2000) stated that small businesses in the Netherlands had many barriers for Internet adoption. The main barrier was start up cost and unfamiliarity with the web. El-Gohary (2012) mentioned about E-Marketing adoption by Egyptian small tourism business. As mentioned above about the start-up cost for Internet adoption, it is same for E-Marketing. To add on, owner’s skills, organisational culture and size matter as well. But still there is high positive impact on the UK small businesses. Even after factors against the adoption of E-Marketing, UK small businesses are still ready to try the compatibility.

Meziou (1991) mentioned regarding the strengths and weaknesses in the adoption of marketing concepts by small manufacturing firms. It was founded that even though there are more strengths than weaknesses in adoption of the marketing concept still small businesses wants to retain the money. They founded that marketing concept in still foreign to many managers or owners of small businesses.

Small business Marketing in Ghaziabad, India Ghaziabad is one of the cities in the India. It is one of the fastest growing city and urban area (Citymayors, 2011). There are varieties of small businesses in Ghaziabad. Some of them are successful the way they operate but still needs to be improved in different prospective specially marketing. Some are just using one way to promote which is word of mouth. According to United Nations (2010, cited in The Hindu, 2010) India has largest amount of uneducated people, which proves the point that the small businesses operated are with mostly uneducated people. There are barriers of marketing for small business, reason being the uneducated people. Small businesses are trying hard by hiring educated people in their business with the vision of being big business one day (Tyagi, 2012).

Conclusion To sum up, small businesses are putting a lot of efforts to stay in the businesses. The owners have to take steps carefully before investing. In this study, the author aims at finding the barriers of the owners thought regarding marketing concept.

Even though there is same principles for operations of big as well as small business but the concepts and thinking is completely different. This paper looks at all the prospects of starting and continues operating the small business. It even considers the thinking of different authors regarding this topic. The secondary research done by author shows the knowledge gap and complete different prospects of owners in different country. It gives clear hint that the barriers might exist because of culture as well. However, the comparison of the data is completed through secondary research and hence, it requires a primary research as well.

Recommendation There are many researches done regarding small businesses and adoption of Internet or marketing concept in different countries. There are different finding done by them. There is still need of in depth research to find the exact reason behind adoption or not adoption of marketing concept. There are limitations of the finding. For the future researchers, they also might be interest in fact how the small businesses succeed or fail because of marketing usage. May be different type of small businesses need different research as manufacturing business requires a different marketing compared to a retail business. The author would like to recommend research regarding specific type of small business that might be more helpful for the owners.

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