This report also includes Government of India policies to support marketing in small business ventures. An evaluation of these marketing policies is also included in this report.

Executive Summary

The word Entrepreneur is derived from French word Entreprendre, which means “to undertake, to attempt, to try in hand, to contract for or to adventure”. A commonly accepted description of entrepreneurship is a process of identifying, evaluating, seizing an opportunity and bringing together the resources necessary for success (forum.belmont.edu ).

In the process of industrial development especially in small business, entrepreneurship has acquired special significance. This is because of its relevance in the economic growth in a rapidly changing socio-economic and cultural situation in developed and developing countries. An entrepreneur is one of the most important inputs in the economic development of a country or with in its regions. The report provides an insight about the importance of marketing mechanism in a new entrepreneurial venture. This also includes the analysis and explanations about the impact and the risks associated with marketing in a new venture and suggestions to improve current situation of entrepreneurs is also provided. Marketing occupies an important place in the management of an entrepreneurial venture. It is one of the key factors that determines the success or failure of a business.

Different aspects of marketing process have been discussed in this report. The marketing process includes different stages like identification of opportunity, market research, choosing the target market, designing the market strategy, analysis of competitors, managing the marketing mix and the implementation of marketing programme.

This report also includes Government of India policies to support marketing in small business ventures. An evaluation of these marketing policies is also included in this report.

Marketing:-

Marketing includes identifying unmet needs; producing products and services to meet those needs: and pricing, distributing, and promoting those products and services to produce a profit ().

Marketing is a key factor for the success of entrepreneurial ventures. The marketing mechanism in entrepreneurial business involves all the activities undertaken in the transferring of goods and titles there to from producers to the consumers. The efficiency of marketing determines the sales and profits of the entrepreneurial ventures. The small businesses are able to prosper with a very significant marketing system.

The marketing mechanisms differ from one industry to other industry. The tiny and ancillary units adopt simple mechanism and medium and large scale organisations adopt full- scale marketing mechanism. In certain cases the marketing of goods or services is entrusted marketing agencies, specialised in marketing operations.

Some of the main features of marketing are:

It is a creative function,
It promotes trade and employment,
It co-ordinates finance, production, distribution. It also determines and directs the scale and value of the total effort,
Emphasis on customer needs and wants,
Emphasis on the social good, on increasing employment, on giving the consumer the chance to decide (Desai:242)

Marketing process:

A large scale business can have its own formal marketing network but a small unit may have to totally depend on the personal efforts and resources, making it informal and flexible. It requires appropriate actions in response to market demands by developing suitable products and effective strategies. The marketing process starts with knowledge of the customer’s needs and ends with a customer purchase and the satisfaction of those needs. Marketing involves three basic elements such as product, the promotional methods and distribution system. These are the core elements of marketing system and also integrated to achieve maximum consumer satisfaction and profits. The marketing process brings together manufacturers and customers which are the main two elements in any transaction in the business process. A transaction takes place when a market offering is acceptable to the customer on the basis of returning the value for that to the producers.

The marketing process comprises with the following stages:

Identification of opportunity,
Market research,
Choosing the target market,
Designing the marketing strategy,
Competitor analysis,
Managing the marketing mix,
Implementation of marketing programme.

Identification of opportunity:

Identification of an opportunity is the first stage in the marketing process. It includes identification of products or services which is required in the market with potential for exploiting the market.

Market Research:

Market research is a very important tool of entrepreneurial ventures. Market research is a continuous process which involves collection of information and data from all sources available. It fills the gap between the development of a product and its ultimate sale to the customer. It helps in evaluating the position of the business in the market and to make necessary modification in the strategy. The purpose of market research is to verify whether the entrepreneur’s perception of the product or service corresponds with that of the customers. It leads to the identification of prospective customers, their extent, and dispersion in the area. It will help to indicate whether any modification of the idea is required.

Quantitative and Qualitative research are the important classification of market research. Quantitative research is concerned with measurement of a market and includes areas such as market size, the size of market segment, brand shares, purchase frequencies, awareness measures of brands and distribution. The qualitative research is concerned emphasis on understanding and empathising with the consumer and establishing the meaning that consumer attaches to products, brands and other marketing objects (Hague:17).

The requirements of market research in small business are need not be full-scale research. The selection of research method will depend on two elements. They are the depth and accuracy of data or information required and the availability of fund. In most of the cases, both this factors will be lacking to a certain extent in the small firms. The marketing research enables the entrepreneurs to produce high quality products according to the market demand to make adequate profit. It also enables the entrepreneurs to plan and organise the entire process of product development and marketing of the products.

Choosing target market:

Target marketing is the process of communicating with a specific group of consumers with similar characteristics, within a broader group of consumers who purchase the type of product. Market Segmentation is the process of target marketing. Once target market(s) are identified, the organization develops a product offering (marketing mix) that is positioned to be attractive to that segment(capcomarketing.com).

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Choosing target market:

While selecting a target market, it is important to analyse the elements like whether to target a single segment or all the segments, depending on the capacity of production and managerial ability. The economies of scale are good for larger firms because of large production capacity and fund availability. But it is difficult for the entrepreneurial ventures in terms of meeting the needs of entire segment of the market. Target marketing is more suitable for small business concerns because the concentration of marketing in one or a few number of market segments will help to reduce the complexity and increase the profit.

A segmentation of market can be done on the basis of consumer goods, durable and non durable goods. The customer preferences may be due to differences in economic, demographic, geographic, use- based, benefit and psychological factors.

The advantages of segmentation of market are(Desai:252) :

Narrowing the range of product,
Ease in preparing the design of the product, its colour scheme, shape, size and the type of package it may require,
Ease in determining the trade channels and avenues for direct selling,
Ease in preparing sales forecasts,
Helps in planning marketing programmes,
Ease in selecting the media for appeals that will be most effective for promotion.

Designing the marketing strategy:

Marketing strategy is the broad marketing thinking that will enable an organisation to develop its products and marketing mixes in the right direction, consistent with overall corporate objectives (wps.pearsoned.co.uk). In a small business venture, the most suitable strategy has to be devised to enter the market and slowly build up and sustain the product. A marketing strategy identifies customer groups which a particular business can better serve than its target competitors, and tailors product offerings, prices, distribution, promotional efforts, and services toward those market segments. Ideally, the strategy should address unmet customer needs that offer adequate potential profitability. A good strategy helps a business focus on the target markets it can serve best(www.sba.gov).

Entrepreneurs are preoccupied with survival during the business start-up period and the marketing strategy will be limited to making a single or a few number of product or service successful. The small ventures should have strategy of building core competencies like unique product or price differentiation which will help in growth and profitability. A marketing strategy is an activity that helps to develop and maintain a superior competitive advantage in the market place. Effective marketing strategy helps to identify and take advantage of customer requirements and market conditions which will help in gaining customer loyalty.

In the small businesses, proper marketing strategies are important because these businesses will have greater impact on the profitability and survival even to the smallest changes in the market condition. Changes in the competitor’s strategy, customer behaviour or fluctuations in the overall market condition can have direct impact on small business. The marketing strategy should include the process of targeting particular marketplace that provides more income and profitability.

Competitor analysis:

Competitor analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors (en.wikipedia.org).

The analysis of competition in the marketplace is a very important element in the marketing mechanism of entrepreneurial ventures. There will be always competition for all the business concerns. The competition could be a new business that offers a substitute or similar product. Competition is not just another business that might take money away from one business. It can be another product or service that’s being developed and which ought to be selling or looking to license before any new entrants.

The major sources to collect information about the competitors are:

advertising ,
press reports,
exhibitions and trade fairs,
questionnaires,
searching on the web for similar products or services,
approaches reported by customers,
flyers and marketing literature that have been sent,
planning applications and building work in progress.

While analysing the competitors it is important for the small business to consider the following factors:

The products or services competitors provide and how they market them to customers
The prices that the competitor charge.
The mechanism of competitors distribution and delivery
The devices competitors employ to enhance customer loyalty and the back-up service offered to the customers.
Competitors brand and design values
Whether competitors innovate - business methods as well as products
Competitors staff numbers and the calibre of staff that they attract
Data regarding infornmation technology used by competition. - for example, if they're technology-aware and offer a website and email
details about the management of competing business
The annual report if the competitor company is a public company
Competitors media activities - often displayed on the business website.

(www.businesslink.gov.uk)

By analysing the above factors, it enables small business to get information about the strength and weekness of the competition. It also gives information regarding competitors strategies and objectives.

Managing the market mix:

A Marketing Mix is the combination of product offerings used to reach a target market for the organization. The marketing mix comprises the Product (what the actual offering comprises), Price (the value exchanged for that offering), Promotion (the means of communicating that offering to the target audience, promotional mix) and distribution (also known as Place, the means of having the product offering available to the target audience). The marketing mix is also known as the four Ps (capcomarketing.com).

Business process involves different marketing activities, consist of four P’s ie,

product, price, promotion and place and it is termed as marketing mix. Following are the explanation of four P’s.

Product:

In marketing, a product is anything that can be offered to a market that might satisfy a want or need. However it is much more than just a physical object. It is the complete bundle of benefits or satisfactions that buyers perceive they will obtain if they purchase the product. It is the sum of all physical, psychological, symbolic, and service attributes. (en.wikipedia.org).

Product is a core element of the marketing mix. It includes everything that a customer gets- quality, design, packaging and after sales service. The requirement of products differs from one segment to another according to the customer choice and preference. The customers may require different grades of quality and sophistication. It is important to provide much importance to the tangible and intangible elements of the product to create an impact in the market.

Price:

In economics and business, the price is the assigned numerical monetary value of a good, service or asset. The concept of price is central to microeconomics where it is one of the most important variables in resource allocation theory (also called price theory). (en.wikipedia.org). One of the most important target of small business firms is to sell the products at the maximum price. The analysis of product positioning is vital to know the whether the product is priced according to market acceptability. The detail about the pricing of competitor’s products is an important factor which will help in decision regarding pricing strategy. The advantage of small business is that an high level pricing can be made because most of such firms provide personalized service.

Promotion:

Promotion is one of the four aspects of marketing. Promotion involves disseminating information about a product, product line, brand, or company. Promotion comprises four subcategories which are advertising, personal selling, sales promotion, publicity, and public relations. The specification of these four variables creates a promotional mix or promotional plan (en.wikipedia.org). Promotion is the process that helps to create awareness of products to the customers. The future of small business is depended on the effectiveness of the promotional activities made for the support. Some of the general media for promotions are:

Advertisement through electronic media,
Advertisement through print media,
Sponsorship of events that provides good scope for advertisement,
Display of posters, placards and hoardings,
Participation in exhibition and fair,
Billboards at strategic location,
Distribution of leaflets,
Direct mailing to prospective customer,
Personal contacts through dealers and old customers(Charantimath:426)

The budget will be a major concern for promotions in the smaller business .Most of the promotional method are not suitable for such business. The products or services can be promoted by direct customer interaction, where good salesmanship is required. Direct mailing to the customers will be a feasible method of promotion for small firms because it is a low cost medium of advertisement

Place:

The process of getting a product from the place it was manufactured into the hands of consumers in the right location at the right time.( ). It is also known as distribution. It includes physical movement of the product and the type of distribution channels or dealership to be employed. Larger firms have the advantage of having regional dealers. The dealers will have sub agents or retailers or will have direct selling process to the customers. But the smaller firms cannot afford to have regional offices because there will be lack of funds. In most of the cases, the authorised dealer of well known brands also buys the unknown brands which are mostly produced by smaller firms. Such dealers get much profit margin from unknown brands because the entrepreneur usually sacrifices certain amount of margin to get an entry to the market. This will also helps in reducing the transportation and distribution cost where the regional dealers takes the goods directly from the entrepreneurs.

Implementation of marketing programme:

For the effective implementation of marketing programmes, proper planning is required. In the order of sequence a time frame has to be made for specific activities and implement the programmes in to practise with concerted effort.

Problem related to marketing in Entrepreneurial ventures:

Marketing is one of the major issues for entrepreneurial ventures. Because of weak financial base, the entrepreneurs cannot spend as heavily as a large unit does on marketing the products. Some of the problems that entrepreneurs face in marketing of product or services are lack of standardisation, lack of sales force, poor quality, limitations in bargaining with suppliers and customers, lack of marketing knowledge and export activities, heavy dependence on the wholesalers or middleman, delay in the credit sale payments and limitation in expanding the market.

Entrepreneurship in India:

The small industry is an important sector of the Indian economy with a noteworthy contribution to industrial production, employment generation and exports. Considering these factors, the Government of India provides more focus and support to the entrepreneurs. For this the government takes initiative to make fundamental changes in the policy framework. The ministry of Small-Scale Industries is the administrative ministry in the Government of India for all the matters relating to small- scale and village industries. The main objective of this Ministry is to make and implement policies and programmes through the sub-organisations. Some of the sub-organisations that related to small industries and entrepreneurial developments are:

Small-scale Industries Board
Khadi and Village Industries Commission
National Small Industries Corporation Ltd ()
Small Industries Development Bank of India (SIDBI) ( )
National Bank of Agriculture and Rural development (NABARD)
National Institute For Small Industry Extension and Training (NISIET)
National Institute for Entrepreneurship and Small Business Development (NIESBUD)
The National Science and Technology Entrepreneurship Development Board (NSTEDB)
Entrepreneurship Development Institute of India (EDII) . (Charantimath:184):

Government Of India policy statement for marketing and exports:

In spite of the vast domestic market, marketing remains a problem area for small and tiny enterprises. Mass consumption labour intensive products are predominantly being marketed by the organised sector. The small scale sector will be enabled to have a significant share of such markets. In addition to the existing support mechanism, market promotion would be undertaken through cooperative and public sector institutions, other specialized or professional marketing agencies and consortia approach, backed up by such incentives, as considered necessary.

National Small Industries Corporation (NSIC) would concentrate on marketing of mass consumption items under common brand name.

Government recognizes the need to widen and deepen complementarily in production programmes of large/medium and small industrial sectors. Parts, components, sub-assemblies, etc. required by large public and private sector undertakings would be encouraged for production in a techno-economically viable manner through small scale ancillary units. Industry associations would be encouraged to establish sub-contracting exchanges, in addition to strengthening the existing ones under the Small Industries Development Organisation (SIDO). Emphasis would also be laid on promotion of a viable and competitive ‘component’ market.

Though the Small Scale Sector is making significant contribution to total exports, both direct and indirect, a large potential remains untapped. The SIDO has been recognised as the nodal agency to support the small scale industries in export promotion. An Export Development Centre would be set up in SIDO to serve the small scale industries through its network of field offices to further augment export activities of this sector.( ).

Government's Price And Purchase Preference Policy for Marketing Small industry Products:

The marketing assistance to the small scale units through preferential purchase by the Central and State Purchase Organisations was emphasised in the comprehensive programme for the development of SSI sector drawn in early 50's in pursuance of Industrial Policy Resolution of 1984. The emphasis was reiterated in the Government Policy in 1991.

Purchase Preference Policy

With effect from July 28, 1989, the Purchase Policy of the Government was modified in a major way and the categorisation of the items was reduced to the following two major groups:

Items of stores reserved for exclusive purchase from KVIC/Women's Development Corporations/Small Scale units and

Others not so reserved

The first group comprised of 409 items earlier reserved for exclusive purchase from the small scale sector. The list of 409 items reserved for purchase from the SSI sector was reviewed and after deleting items having common nomenclature and making the entries more generic as well as addition of new items, a revised list of 358 items was approved by the Committee which also includes 8 handicraft items reserved for purchase from the Handicraft Sector.

Price Preference Policy

Assistance under Government Stores Purchase Programme in the form of reservation of products for exclusive purchase from small scale sector and price preference is one of the major instruments for providing marketing support to the small scale industries. The Director General of Supplies and Disposals, the Central Purchasing Organisation of Government of India provide a number of facilities to small scale industries under its Government Stores Purchase Programmes. These include reservation of certain products for exclusive purchase from the small scale sector and price preference upto 15% in case of selected items which are produced in both large scale as well as small scale units. The Single Point Registration Scheme of NSIC was launched as a market support measure for the Small Industry Sector. Under the Scheme, the following benefits are given to small units which get themselves registered with the NSIC:-

Availability of Tender Sets free of cost;

Exemption from payment of Earnest Money Deposit

Exemption from payment of Security Deposit

Price preference upto 15% over the lowest quotation of the large scale units (on merits)

(www.laghu-udyog.com)

National Small-scale Industries Corporation Limited (NSIC) provides diversified marketing support to small industries through various marketing assistance schemes for reaching multidimensional and multi-locational markets in India and abroad. NSIC acts as a nodal agency to bring entreprenuers closer to various Government purchasing agencies, the largest buyer of various types of products and services, with the intention of creating confidence in the purchasing agencies about entrepreneurial ventures and their capability to supply goods and services of requisite quality, competitive prices and adherence to agreed delivery schedules.

Tender marketing:

The Corporation participates in bulk global tender enquiries and local tenders of Central & State Government and Public Sector Enterprises on behalf of small scale units. It is aimed to assist small industries with ability to manufacture quality products but which lack brand equity & credibility or have limited financial capabilities. Under this scheme, the Corporation has identified large number of items for which it actively participates in tenders of these Departments and Enterprises. On receipt of the orders, Corporation farms out these orders to the units on whose behalf it has quoted. This assistance has enabled a large number of small units to compete for the orders which are normally out of reach of the individual units because of the bulk requirement. Benefits of these scheme are:

Provided with all requisite financial support depending upon the units’ individual requirements like purchase of raw material and financing of sale bill.
Enhanced business volume helps entrepreneurs to achieve maximum capacity utilization.
Exempted from depositing earnest money
Helps to participate in large & global tenders up to its capacity & capability
Assisted technically for quality up gradation and new product development in addition to testing facility
Ensures fair margin to entrepreneurs for their production
Publicity to small industries products
Production of quality products from the small industry sector. (www.nsicindia.com)

Consortia marketing:

A entrepreneurial venture, in its individual capacity faces problem very often to procure & execute large orders, which inhibits and restricts the growth. NSIC, accordingly adopted Consortia Approach and built groups/consortia of units manufacturing same products, thereby easing out marketing problem of small businesses. The Corporation explores market and secures orders for bulk quantities. These orders are then farmed out to small units in tune with their production capacity. Testing facilities are also provided to enable units to improve and maintain the quality of their products conforming to the standard specifications. The benefits of this scheme are:

Participation and Procurement of Orders for bulk quantities
Entrepreneurs capacity of participating in large tenders enhanced
Support testing facility provided by NSIC
Financial assistance for Raw Material, Bill discounting were provided by NSIC.
Wherever required, equipment is also financed to the entrepreneurs on priority
Help in developing /designing of new products and quality enhancement of products.(www.nsicindia.com)

The National Small Industries Corporation (NSIC) through its export development programme is playing a vital role to promote the small industry sector in exporting their products/projects in international, markets by providing following assistance to the small enterprises:

Organising International Exhibitions

Organising and participation in Buyers-Sellers meet

Sponsoring delegation from different SSI sectors to various countries

Providing information related to sales opportunities available in international market

Product specific catalogue preparation

Advertising and publicity in various countries through Indian High Commissions

Offices abroad and Internet

Publication of Exporters Directory

Participating in Global Tenders

Providing assistance in deemed exports

Organization of Seminars and Workshops to upgrade and update SSI with regard to international developments.

NSIC has been instrumental in developing a large number of small scale units to export high quality products such as builders hardware, locks, light engineering products, giftware and novelties, readymade garments and textile products.

Following activities are also undertaken by NSIC for Export Promotion through SSI

Study visit to various developed countries to identify the product range and their market demand.
Arrange visits of delegations consisting of representatives of small scale industries/Associations to different specialises exhibitions and buyers-sellers meets.
Collect samples during the above export promotion visits and to identify suitable small scale suppliers to develop counter samples.
NSIC has already opened two offices abroad at South Africa and Dubai, U.A.E. These offices will be utilized for generation of business for the small scale sector.

Publication of a directory of identified products and possible buyers for circulation to the small scale industries. (www.laghu-udyog.com)

Success of policy:

The policies implemented by government of India to support the entrepreneurs for marketing their products have been widely accepted by the industry. Considering the contribution small industries in exports, it shows that small industries contribute 54 % of the non-traditional and 10 % of traditional product of the total export from India(Charantimath:6). The policy benefits helped entrepreneurs to reducing the complexity in marketing the products and services. The support in technical up gradation helped the entrepreneurs to develop high quality products which enable them to compete in the international market. Globalisation and WTO agreements had some implications on small industries in India. Considering the Government policies and support, it is ideal for entrepreneurs to start new business ventures in India.

Bibliography:

Paul Hauge, Peter Jackson, “MARKET RESEARCH” Kogan Page Limited, 1999

Vasant Desai, “ SMALL-SCALE INDUSTRIES AND ENTREPRENEURSHIP” Himalaya Publishing House, 2005.

Poornima M Charantimath, “ENTREPRENEURSHIP DEVELOPMENT SMALL BUSINESS ENTERPRISES” Dorling Kindersley Pvt. Ltd. 2006

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