Advertising and Promotion Strategies for Small and Medium Enterprises - Assignment Example

Small and medium-sized enterprises (SMEs) are playing a vital role in the world of economy. It has immense contributions related with income, employment and output. The recent global financial meltdown created a tough and hostile climate for SMEs around the world. Advertising and other promotions is very important for any SME’s to remain sustainable in the competitive world. In case of SME’s it is very important to design its advertising according to the strength and capacity to invest. This study will discuss some of the strategies that SME’s follows. It would give clear picture about Advertising and promotion strategies for small and medium enterprises. Introduction Definition of a SME SMEs are companies whose number of workforce falls below certain stipulated number. European definition tells small and medium-sized enterprises (SMEs) employ lesser than 250 persons. That enterprise must have an annual turnover not more than 50 million euro. The annual balance sheet must not be more than 43 million euro. Size can be slightly differs in terms of numbers of employee in different countries. In case of Germany Small and medium enterprises can have maximum up to 255 numbers of employees. In the case of Belgium that number differs. It is 100 employees can have maximum. In India a small enterprise is an enterprise where the lowest level of investment in plant and machinery must be more than Rs. 25 lakh but must not greater than Rs. 5 crore. In India a medium enterprise must have an investment more than 5 crore and less than 10 crore. Importance of general terms The SMEs in Poland contributes almost 50% of their GDP. In the year 2011 small companies 7.7%, and medium companies 10.4%. SME’s contribution to polish national GDP is very much competitive with large scale industry. In UK there are almost 4.8m SMEs. This SME’s are generating 60 per cent of the total employment. This sector is contributing 50 per cent of total GDP. This sector is contributing same as UK i.e. 50% of the total German GDP. The contribution of SME’s in French GDP is almost 44%. It is a sector which contributes large portion of every country GDP. What is advertising Advertising is a form of marketing communication used to persuade, encourage and manipulate a bunch of listeners, viewers or readers sometimes or a specific group to take some purchase related or continue to take up some activities. Advertising can be defined as paid, one-way marketing information persuading from an identified sponsor distributed through different channels of mass communication to promote goods, services or ideas. Advertising identifies current problems, opportunities for any particular products or services and clear way of communications with the targeted customers. Advertising is a communication either oral or written that tries to sell some services or products. In short it is a form of promotion. Strategies for advertising Strategies for advertising can be designed by the below three steps. Those three steps are discussed below. These three steps are very important for SME’s advertising strategies. If all the below written step are followed properly then SME’s can form good advertising strategies. Combination of these three is very important. Objectives of advertising The real objective of advertising is to maintain effective communication between SME’s and its customers. Advertising objectives can be both short and long terms. Objectives of advertisements must be simple but effective communication and well convincing in nature. The following are the main objectives of advertising. Build an image It is one of the main objectives what all SME’s around the world try to achieve through its advertisement. SME’s wants to create its own image in the market with the help of advertisements. A very well designed advertisement is very influential for image building of any SME’s. SME industry is full of cutthroat competitions so specific well designed advertising is need of the hour for building a unique image in the market. It is all about creating a unique top of the mind identity of products or services with the help of advertising. There are lots of SME’s are losing their face in the market for the dearth of proper advertising. Proper advertising is very much required to keep a prominent image in the SME industry. Once the image is created with the help of proper advertising customer can easily recall the brand, a unique image is created. Maintain an image Once the image of a SME has been created in the market it is very important to maintain that image in the market for longer period of time. Innovative advertising are very important for maintaining image in the market. Proper advertising planning is very much important for SME’s to maintain their existing image. SME’s must adjust is advertising very wisely to maintain its image for logger period of time. Often it is being noticed that advertising are image maintainers of different products or services of SME’s. Customers even can identify a very old brand by a very old but well designed and successful advertising. In this way advertising can maintain a brand image for very long period of time. Promote a product In the last twenty years advertising is being used extensively for the promotion of different products and services of SME’s. This industry has faced great impact in terms of their product promotion with the help of advertising (Kula and Tatotglu, 2003, pp. 201-208). Every SME’s has gone for their own advertisements for promoting their array of products. Advertisements have able to address lots of customer together promoting products or services to large crowed. Customers get all the details of products and services by following different advertisements. In this way SME’s have able to promote their products or services with the help of advertising. A very well designed advertisement is very influential for product or service promotions. Advertisement can breaks the boundaries of the country and can promote SME’s products across the world. Changes attitudes It is very difficult for SMEs to earn revenue by selling old products in the same old market in a monotonous way. A well designed advertisement can change the attitude of customers towards different products or services offered by SME’s. One advertisement can bring lots of changes in the customer’s attitude. A well designed successful advertisement can bring positive changes and a poorly designed advertisement can be a reason for negative changes in customer’s attitude towards that product or services offered by SME’s. Gain competitive advantage The market is full of unorganized competitors. There is no place for complacency for any SME’s. Innovative advertising are very important for achieving the competitive edge in the market. Proper planning is very much important for innovative advertisements that can produce competitive advantage. With the help of advertisement SME’s has able to make an emotional relationship with their customers. This would certainly provide a huge competitive advantage for any SME’s. SME’s using more and more advance technologies for advertising their products and services. The usage of modern technology in advertising with a simple and clear cut message is brining lots of competitive advantages for SME’s around the world. Advertising is adding different additional attributes to SME’s brand image. In this way it is providing a serious competitive advantage to SME’s. Advertising media Advertising media means a platform where advertisements can be kept (Kotler, 2002, pp. 46-53). Media can be in different forms like print, electronic format or broadcast. There are lots of advertising media are used by SME’s. Some of those Medias are discussed below. TV add Television is an important media for advertising. All most every house hold has T.V. in their houses. SME’s can use this advertising media for reaching with their products to along base of customers at one go. This media is giving real-time, visual experience to the customers about different products. Advertisement with this media attracts lots of customers. It is Avery famous media for advertising. Cost of advertising through this media is on the higher side. T.V. advertisements are very short in nature but are having very large capacity to influence lots of customers together. Cinema add It is also an advertising media where advertising is done in different cinema halls. Lots of people gather to watch movies in cinema halls. Advertising can be done before the beginning of the movie and during the time of interval. Lots of people can watch that advertisement of SME’s at one go. It is also a very commonly used medium for advertising. This medium is less costly than T.V. advertising. Radio It is a very old media of advertising. SME’s can select a particular F.M station to advertise its products and services. In this media advertise should be done in a continuous basis. Cost of using this media is on the lower side for advertising. Press (magazines) This is a printed form of media. Lots of people read different magazines on a daily basis (Hill, 2001, pp. 56-61). These magazines are very important media for advertising different products or services offered by SME’s there are verities of magazines may be technical magazines, sports magazines, educational magazines etc. SME’s from a particular industry can chose a suitable industry related magazine for its advertising porpoises. Poster Posters are also very effective media for advertising any products or services. SME’s can advertise its products or services by sticking posters in different places of the city. Posters are very attractive in nature can attract lots of customers towards that advertisement. This media is very less expensive in nature. Lots of SME’s uses this media for advertising their products. Posters can be distributed hand to hand basis. Advertising strategies Different strategies created by the advertisers (here SME’s) with the help of advertising agencies, deciding the competitive frame, message argument and target market to be considered in a campaign for advertising specific products or services. Advertising strategies are difference maker for SME’s in terms of their product promotions. Some of the strategies are discussed below (Havaldar, 2010, pp. 90-101). Standardization approach It is a standardized marketing approach that can be used internationally all over the world by SME’s. This approach is based on some assumptions. Those assumptions are people around the world have same needs, tastes and desires. This approach believes in one type of advertising with small modifications irrespective of any place. The advantages of this approach are it can save lots of money for SME’s. It can attach all the customers from different places into a common bond. It can create a common image about the product and services in to the mind of customers. This would help SME’s to influence people spreading across large area. This approach is having its own limitations or disadvantages. The assumption on which this approach is dependent cannot be true for all cases (Damanpour, 1991, pp. 153-158). It has been noticed that as the places get changed tastes, likings, needs and desires of the people also get changed. No advertising strategy can be suitable for all situations. This approach can confuse cross culture people. Once the customer is confused by advertising, it can have an adverse effect on the products and services of SME’s. It is very much counterproductive for any SME’s. This approach sometimes over looks local factors. Innovations for Poverty Action of USA are an example of SME following this kind of approach in 51 countries around the world. This SME is mainly focusing on poverty eradication. Adaptation approach Adaptation approach is all about advertising according to need of different places. Here the main concept is that no single advertising can be standardizing for all places. Every place has its own unique set of needs, desire, taste and culture. According to the approach advertising should be done differently for different places keeping all those above written factors in mind. This approach gives more stress on localization of their advertisements. It gives lots of importance to different local issues. In this approach SME’s tries to create a very close local emotional relationship with customers. This approach is more costly in nature. Number of advertising will be more. It would involve higher investment from SME’s (Carson, 1993, pp. 87-95). As the advertising gets change from place to place the common boding for the products and services is on the lower side. Identification of the local factors is also a very important and unavoidable challenge for all SME’s. Sree Guru Sales of Kolkata is a SME following this approach of adaptation. Strategies for S&M’s Different plans of action created by SME’s to achieve their long-term objectives are called strategies. It is very important that all SME’s must be ready with some plans. All SME’s design certain strategies for them. Those strategies are discussed below. National strategies for SME’s SME’s must design its strategies according to the nature, culture of that country. In this case company must narrow its idea of advertising and promotion to fit in that national canvas. Company must give importance to all the national cultures, need, desire and issues. Every nation has its own societal structure. SME’s must be very care full about the nation’s social fabric. SME’s must design their advertisings and promotions according to the country’s political, social, economical and technical back ground. SME’s can perform a PEST analysis of the country before designing their advertisement and other promotional activities. All the national legal formalities must be taken care of. International strategies for SME’s International strategies must be different from national strategies. SME’s must take broader perspective for designing international strategies. SME’s must consider all the international legal formalities (Capra, 2002, pp. 90-98). SME’s can export their products to international market. It would create an international presence of that SME. SME’s can go for franchise strategy where one SME brand can use other’s advertising and promotional strategies. SME’s can go for licensing strategies for the international market. SME’s can take up different Trunkey projects as their international strategies. In this strategy two entities would combine and perform certain tasks. Budgeting and financial restrictions Continuous trade off between brand and budget have somewhat dulled the advertising and promotional success of Small & Medium Enterprises (SMEs). It is known that implementation of strategic planning, strong analysis, creative decisions on proper time, imagination, information and energy can help the small budget companies to en-route on successful well designed advertisement or promotion. A big marketing budget only does not assure the SMEs to get the success in the market. Budget is a very big problem for SMEs for brand building. Reaching towards large customers is called for a huge risky investment. SME’s must allocate some fixed budget for advertising and promotions. Budget must do according to the capacity of the SME’s (Audretsch, Verheul, Wennekers and Thurik, 2002, pp. 127-135). All SME’s must be very calculative in terms of their budget. There are certain limits after which taxes are higher. Company must keep all those financial restriction in to the mind. SME’s can take loan from different banks and other financial institutions. All SME’s must strike a good balance between their budget and the effectiveness of their advertisements or promotional activities. It requires lots of proactive measures from the side of all SME’s. Conclusion Modern business world is ever changing in nature. Change is the only constant thing over here. Innovation and creativity should be the main focus for SME’s. Commitment from the management and employee is very important for the promotion and advertisement of SME. It is very important SMEs formulate their goals very clearly and then designing different innovative marketing activities suitable with their capabilities and resources. Proper implementation of that strategy is also very important. SME’s must address the tradeoffs between the different promotional activities and their financial capabilities. Investment for advertisement and promotional purpose must be very calculative in nature. SME’s must recognize one thing that huge investment does not guarantee successful advertisement and promotions. Well planned, effective promotions can be done without spending too much money. Promotions and advertisement should be very simple and clear but effective in nature. Complex promotions can cause confusion in the mind of targeted customers. It would be counterproductive for the enterprise. All the investment will go in vain if customer could not relate itself with the promotion and advertisement. SME’s must be proactive in terms of their promotions and advertisements. It is very difficult to strike a balance between the capacity and proper promotion. Every SME’s must keep one fix budget for its advertisement and promotional purposes. There is no scope of complacency as competitors are breathing down the neck. References Audretsch, D.B., Verheul, I., Wennekers, S. and Thurik, A.R. 2002. Entrepreneurship. Berlin: Springer. Capra, F. 2002. The hidden connections: integrating the biological, cognitive, and social dimensions of life into a science of sustainability. New York: Doubleday. Carson, D. 1993. A philosophy for marketing education in small firms, Journal of Marketing Management, Vol. 9 (1), 189-204. Damanpour, F. 1991. Organizational innovation: A meta-analysis of effects of determinants andmoderators, Academy of Management Journal, Vol. 34 (1), 555-90. Havaldar, K. K. 2010. Business Marketing. 3rd edition. New Delhi: Tata McGraw Hill Education Private Limited. Hill, J. 2001. A multidimensional study of the key determinants of effective SME marketing activity:Part 2. International Journal of Entrepreneurial behaviour & Research, Vol. 7 (1), 211-235. Kotler, P. 2002. Marketing Management. New Delhi: Pentice-Hall of India Private Limited. Kula, V. and Tatotglu, E. 2003. An exploratory study on adoption of Internet by SMEs in an Emergingmarket economy. European Business Review, Vol. 15 (1), 324-333. Read More