SME Marketing Strategy

SME Marketing StrategySmall businesses analysis – Do SMEs work with marketing strategy? Can marketing strategy help?
Introduction to SMESmall and Medium Enterprises (SMEs) play a vital role for the growth of Indian economy by contributing 45% of industrial output, 40% of exports, employing 60 million people, create 1.3 million jobs every year and produce more than 8000 quality products for the Indian and international markets. SME’s Contribution towards GDP in 2011 was 17% which is expected to increase to 22% by 2012.

There are approximately 30 million MSME Units in India and 12 million persons are expected to join the workforce in the next 3 years. SMEs are the fountain head of several innovations in manufacturing and service sectors, the major link in the supply chain to corporate and the PSUs. By promoting SMEs, the rural areas of India will be developed.

SMEs are now exposed to greater opportunities than ever for expansion and diversification across the sectors. Indian market is growing rapidly and Indian entrepreneurs are making remarkable progress in various Industries like Manufacturing, Precision Engineering Design, Food Processing, Pharmaceutical, Textile & Garments, Retail, IT and ITES, Agro and Service sector.

Definition of MSMEs in India

Manufacturing Enterprises – Investment in Plant & Machinery
Description
INR
USD($)
Small Enterprises
above Rs. 25 Lakhs & upto Rs. 5 Crores
above $ 62,500 & upto $ 1.25 million
Medium Enterprises
above Rs. 5 Crores & upto Rs. 10 Crores
above $ 1.25 million & upto $ 2.5 million
 Service Enterprises – Investment in Equipments
Description
INR
USD($)
Small Enterprises
above Rs. 10 Lakhs & upto Rs. 2 Crores
above $ 25,000 & upto $ 0.5 million
Medium Enterprises
above Rs. 2 Crores & upto Rs. 5 Crores
above $ 0.5 million & upto $ 1.5 million

Despite its commendable contribution to the Nation’s economy, SME Sector does not get the required support from the concerned Government Departments, Banks, Financial Institutions and Corporate, which is a handicap in becoming more competitive in the National and International Markets.

SMEs faces a number of problems – absence of adequate and timely banking finance, limited capital and knowledge, non-availability of suitable technology, low production capacity, ineffective marketing strategy, identification of new markets, constraints on modernization & expansions, non-availability of highly skilled labor at affordable cost, follow-up with various government agencies to resolve problems etc.

Various methods currently used by SME’s for Effective marketing

1. Business Directories and Portals ( Cost : 5000/year)

a. Trade India, India Mart, India markets
b. Exporter India, Just-dial, Yellow Pages

2. Search Engine Optimized Websites (Cost: 10000/year)
a. Keyword based content design, Analytics, AdSense
b. Online enquiry, order, payment and feedback
c. Online Product display, Implementation guides and catalogs
3. Exhibitions and shows (Cost: 20000/year)a. Various city, state, national and international exhibitions
b. Trade shows organized by government and private sector
4. Online Marketing (Cost: 20000/year)a. Ebay, Amazon, Other listings
b. Using social media to spread presence
i. FB, LinkedIN, Twitter, Blogs etc
c. Online advertising, Pay per click, Link Building
d. E-Newsletter ads
e. Online value proposition (Branding)
5. Mass marketing (Costs: 30000/year)a. Using business directory of contacts to target huge customer base
i. Email, SMS, Telesales, Magazines
ii. Paper Pamphlets, Posters, Sponsoring events
iii. Paper, Local or National TV and Other media mentions
6. CRM (Costs: 10000/year)a. Social Bookmarking
b. Updates, Gifts, Outings, visits
c. Guestbook, Customer testimonials
d. FAQ’s
e. Forums and Feedback
f. Auto responses, Follow-up continuously and quickly
g. B-Cards, Logos on office material7. Monitoring competitors(Cost: 5000/year)

a. Google Alert, Google related search, Yahoo Site Explorer
b. Magazines, Networking with customers

8. Internal(Cost: 5000 – 100000 /year)a. IT enabling the business(Software, Hardware, Connectivity)
i. Outlook, MSCRM, Office
ii. Tally, ERP
b. Training employees on technology.9. Products and Services (Cost: 10000 – 50000/year)

a. Catalogs, Instruction manual, Videos
b. Quality packing and Delivery
c. End to end solutions
d. Copyright, Logo, Trademark, Patents, Business Secrets
e. Pricing, samples, Promotions
f. Quality – ISO, Lean, Six-Sigma, TQM, Kaizen

10. Employees

a. Food facility, Flexible timings

11. Public Relations (Costs: 5000/year)a. Suppliers, Customers, Bankers
b. Society, Other stakeholders

 
Lead Generation
Media
Use vs Response
%
Used for
ROI
Cost
Industries/used for
Email
50 – 5
Communication
High
Low
Brokers, Online Shopping, Infra
Social Media
5 – 10
Presence
High
Low
Tour and Travels, Infra, Education
Business Directories
40 – 20
Customer information
High
Medium
Traditional
SMS
20 – 5
Communication
High
Low
Hotels, Brokers, Infra
Websites
30 – 5
Employment, Presence
Medium
Medium
All
SEO
15- 35
Presence
High
Medium
Online Shopping, Tours and Travels
Exhibitions
20 – 20
20%
High
High
Traditional, Tours and travels, hotels
Print
30-30
Customer Leads,Presence
Low – High
High
Tours, Hotels, Education

More than 30% of all Internet search activity is “local”. Internet marketing (if done properly) can be the most efficient advertising available to businesses today. Marketing investment is done only if it hits bottom-line i.e ROI. Such pay per click or pay per lead. Now a days Sales Marketing is losing over Leads marketing. The usual marketing strategy does not go well with the SME’s. Few of the major drivers in SME business are:

Business Directories to get hold of large customer base and is used for generating leads. After screening down to top customers personal visits are arranged to convert lead into sell. Huge and established customers do not initiate contacts with SME’s. Small customers do make contacts through portals and business directories. Follow-up can extend to months or years. These visits consist of negotiation and presentation of the product and services. Competitor product or service analysis is done on cost, time and technical basis to replace its product or just to get entry.

Once customer is acquired then the relationship can be developed with personal touch. Dinners, lunches, personal and corporate gifts/samples are very frequent. Every customer is treated differently. Pricing, promotion, quality and service are customized as per requirement.

Some customers prefer timely delivery, some quality and some other reliability of long-term supply. Maintaining customer is also major task as generally new customers are acquired through contacts and networking. Bad mouth publicity or bad quality of products are never sustained and can lead to failure of business. Developing and maintaining good name is very important and is major source of new customers.

While IT has enabled centralized infrastructure, faster communication and major source of employment, it yet has not playing important part on core marketing. In many industries internet is used to learn cost effective operations and production processes. Email is used now days by 70% and more SME’s for communication. Condition is very different in IT related industry where WWW is very important tool to maintain edge over competitors. SEO websites are leading the way with social media presence. Finance related industries use telemarketing and mailers for promotions and CRM. Finally it all goes down to cost effectiveness if you can provide technically and quality wise good product. In some businesses relatives, friends or even similar caste gets preference over other better competitors. Corruption also is major influencers for orders in co-operative sector due to which many sugar factories have been failed to perform in huge potential market. All in all you should be doing networking as if your life depends on it, if you want to stay, grow and sustain SME business.

 

Post by- Shridhar

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