Study shows many companies don't understand even basic marketing techniques
Just over half (52%) of Quebec small businesses don't have a marketing plan, analyze their competition or measure their results against clear objectives. What's more, 16 per cent of SMEs believe that marketing actions generate no payback at all.
Those are the some of the results of a study of 1,000 Quebec businesses with between 20 and 250 employees conducted for the Montreal Marketing Association by CROP and Leger Marketing, to determine which marketing techniques they employed on a regular basis.
According to Bryan Barbieri professor at Concordia University's John Molson School of Business, the absence of a marketing plan is "very important," because a plan is a "manifestation of a company's efforts to make things happen." That so many small businesses are seemingly flying blindly in their marketing efforts is an indication of how far the profession still has to go in making its importance felt.
Study results indicate a lack of knowledge among small businesses of even the most basic marketing concepts. For example 86 per cent of respondents said they saw a difference between sales and marketing, a key distinction.
But many seem to have misunderstood the difference. Sixty-one per cent of those surveyed defined marketing as "the possession of efficient sales and promotion tools to stimulate purchasing." However, when performed properly, marketing is not just a support system for sales.
Quite the opposite said Robert Gauthier, president of the Montreal Marketing Association, and a consultant with Formaplans Marketing. "Sales is a part of marketing, but it only a small part," said Gauthier. "(Sales) is responsible for selling a product once it is produced. Marketing is responsible for finding out whether there is demand for the product -- before it is manufactured."
The distinction is crucial. Because once a product is manufactured, if there is no demand, even the best salesman will not be able to sell it at a profit, if at all.
"Small businesses tend to be concerned primarily with selling products as fast as they can," said Gauthier. "But they should first be do a market study that includes a survey of the competition and identifies whether there is demand, and at what price."
This lack of strategic thinking among small businesses is evident -- even with those that do marketing -- by the way they set up budgets. Only 20 per cent of those surveyed allocate funds based on clear objectives and the means required to attain them. The rest (80 per cent) calculate budgets based on a fixed percentage averaging 2.2 per cent of last year's sales.
Another study finding was that as businesses get bigger, so do marketing budgets. For example 82 per cent of the companies polled which have no marketing department have between 20 and 29 employees, and 84 per cent of those had sales of less than $2 million a year.
On the other hand companies with marketing plans, and which provide formal training to employees and analyze competitor's and client's needs on an ongoing basis, are more likely to have annual sales in the $10 million range. These companies also devote much larger budgets (about 5 per cent of sales) to marketing.
If anything, the study, because it focuses on companies with 20-100 employees, and leaves out those less than 20 employees, may overstate the number of small businesses that use sophisticated marketing techniques.
The $60,000 survey was funded by the usual "Quebec Inc." suspects including the Ministère de l'Industrie et du Commerce, Hydro Québec, and Desjardins. These organizations and the Montreal Marketing Association will use the information collected to target training seminars for small businesses.
Although Barbieri participated in setting the study parameters, he cautions against making quick generalizations about the survey results. "Just because companies don't perform such-and-such a task does not necessarily mean that they are doing bad marketing, said Barbieri.
"More and more we are realizing that marketing is not merely a function, it is a mindset, that involves a deeply imbedded appreciation of, and commitment to customer satisfaction."
Only by meeting customer needs can a company expect to see profits.
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|© 2001 Peter Diekmeyer Communications Inc.|