The Concept of Entrepreneurial Marketing - Essay Example

Strategic Entrepreneurial Marketing

Introduction

Background on the nature of and evolution of marketing for SMEs and big firms

Many companies that started small and grown to become multinationals have a lot to offer regarding growth models. Such companies as Microsoft, Virgin and Dell were the small business but through marketing efforts and entrepreneurship have grown to become large multinationals. As the field of entrepreneurship expands, different strategies and models have emerged discussing successful entrepreneurship. Small and medium businesses face the challenge of limited resources and stiff competition among themselves and from large and established companies. A startup company with limited resources, small customer base, limited regional presence, and few employees find it difficult to compete against large giants in the industry. To beat the challenges and realize success, they not only need to turn their weaknesses into strength but be dynamic and utilize unorthodox strategies to woo customers against the competitors.

The concept of entrepreneurial marketing dates back to the 1990s when work on issues related with the congruence between traditional marketing theories and those advocated by innovators started. Traditionally, marketing was seen to function in a consistent environment where market terms are static, and the firm meets clearly defined customer requirements. The traditional forms of marketing, though broad, fall under the four categories of telephone, print, direct mail or broadcast advertising and marketing. Print marketing is the oldest marketing strategy utilizing paper as the primary form of disseminating information. For centuries print marketing has been the norm. Egyptians designed sales messages and posters on papyrus.

Recently, big firms purchase huge spaces in magazines, newspapers, and newsletters meant for distribution to large audiences. Broadcast marketing emerged in the 1990s with the radio being the main platform until 1941 when the first TV commercial was created. Direct mail marketing has existed since the 19th century. An example is the Sears Catalog that was sent to targets in 1888 via mail. The latest form of traditional marketing is telemarketing. Marketers deliver sales messages over the phone to convince customers to buy goods and services. This form of marketing is controversial as some marketers employ aggressive methodologies that have attracted federal laws for control. Nearly every firm employ one or more form of traditional marketing strategies. For the most part, the marketing strategy is dependent on the available resources. Bigger companies mostly employ direct mail and TV commercials while mid-sized companies employ almost all forms of traditional marketing interchangeably. Entrepreneurs and small business limited by resources most often employ print media and local radio to reach to their clients. While some may use direct mail and telemarketing, emerging services such as local cable programming have made it affordable for them to market themselves.

Converse to traditional marketing is entrepreneurship and innovation that function in an indeterminate environment where market conditions fluctuate and the needs of the customers are not known. In the early 90s, researchers concentrated on the point of convergence between entrepreneurship, marketing, and innovation (Hills, 2008). Further works on the fields led to the identification and conceptualization of distinct entrepreneurial and innovative ideas that complimented strategic entrepreneurial marketing. The argument is validated by the definition of marketing by the American Marketing Association as a strategy that focuses on managing customer relations for the benefit of the firm and its stakeholders. A practical application of this definition is the utilization of social media networks to keep customer relations sound for the benefit of the firm and its stakeholders.

The term entrepreneurial marketing emerged in 1982 at a conference of small business organized by the International Council for Small Businesses. The other player was American Marketing Association, being the only two professional bodies that had been formed at the time. Though the focus of research was not implicit at the time, further progress was recorded in the coming years and in 1999, the Research, Marketing, and the Entrepreneurial journal was founded. Initially, entrepreneurship marketing focused on the operations of startups and small businesses (Metcalfe, 2006). Bust since not all small business owners are entrepreneurs, the focus has since shifted to marketing activities conducted by entrepreneurs; that is those who create a new product for getting profit and growing the business (Runyan, Droge, & Swinney, 2008).

Overview of the company used for the case study: Toger Food Store

The company to be used for the case study is Toger Food Store. Toger Food Store is an eatery and a retail grocery store located within a small neighborhood. Toger Food Store specializes in quick snacks and groceries. It has a single store located near a busy commercial center with schools, healthcare facilities and government buildings. Its clientele majorly comprises of learners and workers working in the commercial center and the local community. Toger Food Store was an invention of one employee who used to work in the commercial center. The employee recognized a need to fill a gap that existed in the market. Employees and students would travel some miles to access food eateries and grocery stores. Though with time larger retail stores and food vendors have established a presence in the commercial center, Toger Food Store commands a significant share of the market by providing value to its clientele. According to the entrepreneur, Toger Food Store beats the competition by providing exemplary customer service and two innovative products – phone/internet ordering and free delivery.

Toger Food Store has twelve employees - three chefs, three delivery personnel, one ticketing clerk, three packers/store attendants, and one store manager. Of the twelve employees, five are related to the owner of Toger Food Store. Essentially, Toger Food Store is family owned and run. The operation manager, Brenda Marvin, and the clerk are owner’s daughter and first cousin consecutively. The store manager is tasked with the day to day operation of the store as well as procurement of goods, marketing, accounts reconciliation, and general administrative duties.

Structure of the research

The next section of this research is the literature review. The literature review section is divided into five major subsections. The first section defines an entrepreneur, entrepreneurship and entrepreneur marketing and compare them based on the works of different scholars. The second sections give a chronology of events of development and consequences of administrative marketing (AM), entrepreneurial marketing (EM), and contextual marketing (CM). Multiple authors have defined, theorized, and developed models related with AM, EM, and CM. The third section details the methods for collecting data for the case under consideration. The next section ties the marketing theories (AM, CM, EM) with the marketing activities of Toger Food Store. Finally, the fifth section synthesizes the marketing strategies that are currently in use in Toger Food Store.

Literature Review

Definitions of entrepreneur, entrepreneurship and entrepreneurial marketing

An entrepreneur is defined as an individual that sets up or operate a small business and solely assumes all rewards and risks. The entrepreneur is termed as the business leader or inventor that takes the business through different phases of new idea generation and development while assuming greater than normal financial risks.

Entrepreneurship, on the other hand, is the process of generating, managing, and organizing a business venture with any of its associated risks with the aim of making rewards. A classic example of entrepreneurship is setting up and running a new venture. The common denominator of entrepreneurship is the process of turning an idea into a profit while managing to surpass the risks associated through such techniques as innovation. An entrepreneur and entrepreneurship are tied together with the former representing the actor while the latter representing the process through which the actor goes through.

The definition of entrepreneurial marketing differs depending on the scholar. The first and standard definition by Morris (2002) consider EM as the approach of identifying and leveraging opportunities from customer to acquire and retain profit through constant innovation, risk minimization, and value addition. The definition adds up the values of entrepreneurship and marketing as the recipe for success in a usually fragmented, dynamic and hostile environment. The definitions draws a direct linkage between entrepreneurship as a process and marketing as a resource to overcoming the risks facing the entrepreneur.

Anderson and Gadderfors (2008) consider marketing to be completely assimilated into entrepreneurship. The total assimilation is due to the changing dynamics of the market where it is no longer an avenue for the transaction but a socio-economic interaction where customer co-produce and co-consume products, lifestyle and identities. Anderson and Gadderfors (2008) argue that entrepreneurial marketing involves the task of creating opportunities. The marketing arena is viewed as a dialogue field where expectations are being created and recreated based on the conditions at hand.

Kraus and Harms (2010) have contributed to the body of knowledge recognizing the assimilation between the entrepreneurship and marketing. They define entrepreneurship as a set of activities for developing, communicating and providing value to the customer and for enhancing customer relation in ways that empower the organization and its stakeholders financially. According to this argument, entrepreneurship may be conducted without relying on the resources that are currently available. Though the definition does not seem to stress more on entrepreneurship and the creation of opportunities, it delves more on the marketing aspects of creating, informing and delivering value to the customer. The three definitions are given so far center on the business processes.

However, there exist other radical definitions of entrepreneurial marketing. For instance, Morrish and Miles (2010) consider EM as a full integration of the aspects of entrepreneurship and administrative marketing, hence possessing a strategic orientation that exceeds the conventional marketing purpose. Morris and Schindehutte (2002) describe EM as an emerging perspective that replaces the traditional marketing and is linked with the use of innovative practices and techniques such as disruptive, guerilla, and far-reaching marketing. Kotler (2003) argues entrepreneurial marketing attach value to the lifecycle of the company. The author explains that a different kind of marketing, rather termed informal, is practiced at the early stages of a business or a firm. Since most firms are started by individuals who obey their wits, they create an opportunity and knock every door to get recognition. As the firm grows and expands, marketing becomes structured and is assigned to marketing departments and consultancy public relation firms. This second stage of marketing is referred as formalized marketing. Finally, when a firm enters the third stage, it uses formulated marketing. At this stage, the standardized approach initially used becomes excessive and hence a need for new methodologies that are free from the aggressive and passionate tactics of marketers.

Administrative Marketing, Entrepreneurial Marketing, and Contextual marketing

Morris et al. (2002) model delineated the points of convergence between EM and critical factors for success. Stoke (2000) came up with a model of the entrepreneurial marketing process that inculcated innovation as the beginning, followed by target customers, interactive marketing processes, and networking. Stokes 4I model of innovation, identification, interactive, and information is predominantly conceptualized from practice-based theories contrary to Morris, (2002) models that were based on theoretical academic principals. Morris developed the model based on perspectives projecting on the changing nature of marketing, for instance, the emergence of viral marketing, digital marketing, and guerilla marketing. The limitation of the model is the lack of cognizance of social marketing even with the emergence of social entrepreneurship since the 1970s.

Anderson and Tell (2009) argues that EM cannot exist without the existence of entrepreneurs, but AM is exclusively customer-centric. Contextual Entrepreneurs CE associate with customers to create a strategy, culture, and behavior that is acceptable to the firm. Entrepreneur’s activity are influenced by their inherent personal features, but literature exists that demonstrate the relationship with personal traits such as level of education. Notably, a consensus has emerged on how EM and AM act in the face of marketing. Dew (2009) outline five distinctive features between the two groups of individuals. First, the vision for the future differs. For entrepreneurs, the future is shaped by some voluntary action of the agents and cannot be predicted. For AM, the future is an extension of the past and therefore can be predicted. Second, the basis for making the decision are defined by available means for entrepreneurs and purposes for AM. Third, the attitude toward risk is defined by how much the entrepreneur is willing to lose by selecting a choice but in the case of AM it is defined by how much is to be gained. Fourth, non-entrepreneurs value cooperation, unlike entrepreneurs who value cooperation. Finally, for entrepreneurs, contingencies are perceived as opportunities for developing a new concept and product but for non-entrepreneurs, contingencies are obstacles that should be avoided through accurate prediction, careful planning, and concentration on objectives.

Further, strategic EM could be viewed as a response to a market change or turbulence. According to Slevin & Covin (1990) firms could alternate between strategic EM and bureaucratic means depending on the level of competition, turbulence or hostility on the market. The significance of strategic EM is clear when a firm traverses a cycle of creating and recreating competitive advantage. In the scenario of a turbulent market and where a firm desires to create a competitive advantage, it invokes strategic EM. When the advantage is established, the EM processes becomes less effective compared to traditional marketing capabilities, and as such, the firm waits for another instance of turbulence dictated by market changes.

There are similarities and differences between traditional administrative marketing versus entrepreneurial and contextual marketing. The comparisons are notable in strategic orientation, pledge to opportunity, resource allocation and control, management structure, and opportunity development expertise. Traditional administrative marketing structure is defined by the 4Ps and the SME methodologies. On the other hand, EM is pegged on four perspectives as postulated by Hansen & Eggers (2010). Hansen and Eggers (2010) argue that marketing and entrepreneurship interface at four major perspectives. First, the two disciplines share some commonalities. Second, entrepreneurial issues are thought to exist within a marketing research framework. Third, marketing issues are thought to be viewed through and entrepreneurial lens, and finally, entrepreneurship/marketing result in a unique interfacing of concepts that neither subscribes to the second or third perspective.

Both EM and AM stress the importance of flexibility, adaptability, and consistency in their marketing strategies. According to Hills, Hultman, and Miles (2008) firms are willing to incur any cost and effort to satisfy the needs of the customers. Their ability to make decisions quickly and adapt to the prevailing environment is one of the strategic capabilities. This capability is a major source of sales revenue for the firm, on the short-term and long-term basis. Gaddefors, (2008) stress the importance of bringing flexibility and adaptability to the market condition and this argument cannot be overemphasized for EM anticipating growth.

Regarding strategic orientation, Schindehutte and Morris (2006) found EM to be driven by strong commitment and zeal for marketing. This is in contrast with AM where marketers behave rationally and sequentially. EM marketers live continuously with the demands of the customers, market and individual preferences that is shaped by innovation. Every marketing opportunity for developing competitive advantage is leveraged without being constrained by previous believes on strategy. EM perceives the market as a fragmented set of elements that impact on performance. In contrast, AM perceives the market as a substitutable, articulate, and comprehensive set of requirements that encompass the traditional marketing mix of price, product, promotion and people.

Covin and Slevin (1999) posit that EM is more driven by opportunity than AM. Marketers create the product and the market in the case of EM through innovation of products, process, domain, and strategy. In an entrepreneurial firm, entrepreneurship and marketing permeate the entire levels of the firm with the recognition and exploitation of opportunities being higher than AM.

EM value long-term orientation to opportunity development and exploitation. To do so, it ensures to meet all customer demands by employing innovation or creativity. There is no formalized marketing plan for EM, unlike AM that employs marketing plans (Bjerke & Hultman, 2013). EM and AM differ on resource control. Big firms are guided by the need to achieve financial objectives such as ROI and profit. EM business owners mix personal and business goals. The goal set established by EM business owner’s impacts on the business growth significantly.

Deacon & Harris (2011) postulated “contextual marketing” arguing that it is a culmination of many components. The person as a marketer in a small firm remains a puzzle in management literature of small firms. It is observed that there is a void on the administrative marketing concepts that can give a better understanding of what small firms do when they do marketing. Stokes, (2000) argue that small firms are social constructs that exist in a context associated with an authentic self. Researchers have framed this existence by an entrepreneur and assigned an individual and emotional perspective relating to firm performance. Contextual Marketing (CM) is adapted from the fourth perspective presented by Hansen and Eggers (2010). This fourth perspective is synthesized to six dimensions (Morris et al. 2002) so as to provide a comprehensive reflection of the individual as a social construct to the marketing approach. Hansen and Eggers (2010) postulate that individual in small firms oscillates between dual marketing approaches shaped by internal and external factors. The factors may include the perception of their individual self, the sense of self as realized by interaction with others, and motivators that may be intrinsic or extrinsic.

The table below compares the three marketing concepts based on seven indicators.

Dimension/Approach

AM

CM

EM

Proactivity

Change marketing mix based on existing environment

Survivalist – maintenance of status quo for personal value creation with no major incentive to grow business

Strategist – Grow the business by leveraging strategies shaped by individual aspirations

1. Existence of commonalities between EM and EO (Morris et al., 2002, Hansen and Eggers, 2010)

Opportunity

-

Survivalist – opportunities are created depending on the needs for maintenance

Strategist – Continually expand the opportunity horizon beyond current needs

As in 1

Customer

Customer creation is through external sources of intelligence/research e.g. survey

Survivalist – rely on existing customer base

Strategist – Creates new customer and market

As in 1

Level of innovation

Reacts to and adapt to market demands. Innovate incrementally

Survivalist – forced to innovate by market conditons e.g. new entrants

Strategist- Constantly developing new products for personal development and aspirations

As in 1

Risk

Manage risks in marketing activity

Survivalist – elements of fear and emotion stiffle risk management. Control is not guaranteed

Strategist- risk control through market approach. Control is maintained

5. Second perspective (hansen &Eggers, 2010)

Resource management

Manage resource as if they are scarce

Survivalist – Use internal or external resources for business e.g. gifts, family

Strategist- creative use of resources

6. Third perspective(Morris et al (2002), Hansen and Eggers (2010)

Value creation

-

Survivalist – customer liking approach, Personal motivation to maintain value

Strategist – Customer-centric, entrepreneur-centric. Value is co-created.

As in 6

Table 1 Summary of EM, CM, and AM approaches

Case Study

Marketing activities for Toger Food Store is a challenge for Ms. Marvin. She faces stiff competition from large food vendors and retail stores in the region who have opened branches in the commercial center. Coupled with limited resources, Marvin cannot hire marketing consultants and graphic designers to design marketing campaigns that capture the attention of the locals. The local competitors includes small and large enterprises. SMEs resemble in their capacity and operations with Toger Food Store. Large enterprises includes retail stores and chain of hotels and restaurant that have recently rolled out delivery services. They are established with all the resources and platforms such as website for e-commerce, distinct marketing departments and multiple marketing channels.

Marvin has been at the helm of the business for one year, having graduated not too long ago. Being a business administration major, she resorted to applying what she learned to improve his family’s business. Marvin is a social media enthusiast and is available for almost all platforms. Recently, she decided to create a Twitter account, Facebook page, and InstaGram accounts for Toger Food Store. She invited customers visiting the store to like the pages and engage on what they would like improved regarding food menus, delivery efficiency, and pricing. Each single day, Marvin award special discounts and gifts to the most active social media users. Ever since she launched the strategy three months ago, sales in the store have increased by 5% and store visitors have doubled.

Rather than taking the passive approach of marketing like her father, Marvin is engaging all stakeholders with the aim of surpassing the customer requirements in goods and service provision. Since she was appointed the manager, she has rolled out a new line of service - home delivery at a competitive price. Ms. Marvin promised to beat large retail stores in speed and convenience of supplies home delivery.

Methodology

To establish the behavior of the firm and generate a hypothesis, the researcher collected data from Toger Food Store using a series of in-depth, structured and semi-structured interviews. A questionnaire was drafted for the purpose of data collection. The questionnaire was sent out to target audience including employees of the food store, the upper-level management, and the customers. Those who responded to the questionnaire was asked if they were willing to have a semi-structured interview where they get to talk about the marketing strategies utilized in the firm. Subjects were interviewed starting with broad questions then to more specific details. For instance, the first interview question was “How to Toger Food Store generate revenue?” Responses from the interviews were transcribed into English and analyzed independently to give a higher degree of validity

Discussion

Toger Food Store used had limited forms of marketing before the current manager came on board. The founder revealed in the interview that he could not afford some administrative marketing strategies such as TV commercials, audio, and print. Rather, the founder majorly relied on word of mouth. Having worked in the commercial center for some time, he used his links to friends, acquaintances, and workmates to attract customer to the store. The founder had a habit of offering huge discounts to his former colleagues and friends. While the customer footprint was satisfactory, it majorly comprised of the older citizens in the same age group as the founder. The young students and employees in the commercial center termed the store as “old school” and did not appeal to them. From a marketing perspective, the proactive nature of the store felt under AM and CM. The owner could change the marketing mix (people, price, place, and promotion) according to the needs of the markets. When sales were low, the owners could call his friends and promise them discounts if they came for meals or groceries. With this approach, the owner maintained a status quo for personal value creation without any committed attempt to grow the business. The owner is a survivalist type of a contextual marketer.

Similarly, the opportunity is created by the owner of the business in the event of a personal needs for improvement. In most instances, the returns obtained from the business were enough to cater for the owner’s needs, except when there is an emergency case that requires a lot of finances. This way, the owner would resuscitate creative means of generating more sales and profit, for instance by obtaining extra funding from family and increasing the portfolio.

Concerning innovation, Toger Food Store only started offering supplementary services after competitors lead the way. The owner viewed supplementary services such as free Wi-Fi and provision of ambient seating spaces as unnecessary due to the size of his business. This form of contextual marketing is not strategic but associated with a survivalist. Other than creating new customer base by innovating product offerings, the owner of Toger Food Store relied exclusively on existing customers.

Resource management in Toger Food Store also takes a survivalist contextual marketing. Toger Food Store derives its competitive advantage from the already existing family resources. The workforce in the company is drawn from the extended family of the founder and some close friends and associates. Ready access to family resources strengthens the firm. This type of relation created in family-owned/managed entities is what Habbershon, Williams, and MacMilliann (2003) termed as “familiness”. The “familiness” give a powerful and unique capability that is beneficial to the company. Together with other attributes such as the engagement and the pledge of the members, the entrepreneurial nature and goodwill of the founder, the vision and mission of the company, management techniques, public image, and trust among family members, all create a strong mesh that can propel the company to greater success (Chrisman, Chua, & Steier, 2005).

Risk management is a tricky concept at Toger Food Store. There is no laid down the process for managing risk. While the owner of the business strives to manage risk in marketing activities, control has never been attained, and the owner is always afflicted with the fear of what would happen if the marketing strategy is unsuccessful.

Analysis

The marketing strategy adopted by Toger Food Store after the change of management is considered entrepreneurial in nature. As illustrated in Table 1. EM accrues the elements of AM and CM to bring about a new form of marketing that is adaptive, responsive, and cost-effective. As stated, manager of Toger Food Store requires a new form of marketing approach that brings the best from existing customers and pulls new customers. Morrish and Miles (2010) and Kotler (2003) defines EM as encompassing the practices of marketing and entrepreneurship. In this definition, there is a component of strategic CM and entrepreneurship intertwined seamlessly to bring out effects that surpass those of AM. Kotler (2003) argues that a firm employs strategic EM at the earlier stages of the lifecycle. This is the stage that Toger Food Store is at the moment. The kind of marketing seems informal as there is no organizational structure nor a specific department that handles it. Rather, it is adaptive, and the manager knocks at every door of opportunity with the hope that it becomes an avenue for growth and success for the firm and stakeholders, and source of satisfaction for the customer.

Hansen and Deacon (2011) differentiates EM from CM and AM based on three variables. The basic premise of EM is the development and sustenance of competitive advantage through value creation and innovativeness. The manager of TFS is bringing forth innovation by introducing a new line of businesses such as home delivery and customized services –something that is not common with SMEs in the locality. Contrary to CM and AM, the orientation of EM is driven by passion, zeal, creativity, and perseverance. These are the basic tenets of creating strong relationships with customers and building loyalty. The context of EM is characterized by fragmentation, turbulence, and emerging markets- matching that of TFS. Finally, the locus of EM is internal and shared vertically by others within the firm. Toger Food Store subscribes to the vertical locus. According to this model, the strategic EM is better championed by the top leadership or the entrepreneur (Monsen & McKevie, 2011). Ms. Marvin, the manager of TFS, is responsible for championing and promoting the marketing of the business in forms that contradict the conventional marketing philosophies. The manager is taking the lead role and bold steps and risks by popularizing the food store among the customers through social media. The manager wields almost all the power concerning running Toger Food Store and uses the same to introduce new concepts of marketing the business.

The central element in EM is customer orientation, brought about by increased value creation (Bjerk & Hultman, 2002). Toger Foods Store has embedded digital marketing to create and strengthen customer relations. TFS employs word-of-mouth, e-marketing and electronic word-of-mouth using social media networks. The insights derived from social network marketing provide an opportunity to understand the customer more. The entrepreneur uses the competitive information to establish control for the future. For instance, analyzing followers on Twitter or Facebook likes to provide TFS insight on which campaigns, products or services are effective.

There is more strategy in decision-making at Toger Food Store than before. The manager designed a network involving the entrepreneur, the customers, family relations, and friends. The activities subscribe to the first perspective of EM as postulated by Morris (2002), Covin and Slevin (1994) and reported by Hansen and Eggers (2010). The manager is the lead actor overseeing the network activities. Employees and family members develop their own sub-networks using company resources and contacts. At the end of it all, Toger Food Store has an extensive organizational network that markets its products. The manager is cultivating a web of direct contacts through social media that it uses the spread the word on the overall operations of the company. Through the interactions, a cohesive and diversified network of customers is created. The two groups are significant to the expansion of the company. A cohesive network function to promote loyalty and solidarity of the customers while a diversified network enhances the reach of the marketing efforts. It not only popularize the company among the internal and close-knit members of the network but among extensive cross cultures leading to a wide range of ideas that can innovate the product offerings.

Conclusion

This paper has extensively dealt with the topic of strategic entrepreneurial marketing bringing into light the various forms, frameworks and principles. The paper has provided the different types of marketing including AM, EM, and CM. Further, the paper uses Toger Food Store as a case study to study the three types and identify the appropriateness of each approach. There are similarities and distinct differences between AM, CM and EM by level of innovation, proactivity, customer, resource management, risk minimization, and value creation. Toger Food Store initially leveraged survival CM but after the change of management, it leveraged strategic EM. Further, the manager of Toger Food Store is the core of the marketing network, deriving value from the customers, employees, family and competitors.