Marketing and the Small Manufacturing Firm in Scotland: Finds of a Pilot Survey

MARKETING AND THE SMALL MANUFACTURING FIRM IN SCOTLAND: FINDINGS OF A PILOT SURVEY The small firms sector has been seen by the British Government as a means of helping to solve economic problems in the United Kingdom. As branch plants of many multi-nationals have closed, and as employment has risen in the peripheral UK regions and inner cities, increasing attention has been paid to the small firm as a means of reversing economic decline. The government has implemented a number of measures and financial incentives designed to aid the small firm. Small business research has tended to focus on the employment-generating capability of entrepreneurs and the reasons for establishing small firms. To date, however, apart from the Scottish Development Agency's survey of over 800 Scottish small firms in 1977 identifying marketing as a major problem area,1 researchers have not investigated actual marketing strategies in small firms. A notable exception is Hills' work on venture capitalists' perceptions of market analysis in the business plan, which surveyed U.S. venture capital firms that have assisted entrepreneurs and evaluated business plans. Hills concluded that entrepreneurs do not place enough importance on in-depth market information and instead rely too much on intuition when estimating market potential. As a result, they tend to overestimate demand. The main reason they use market analysis is to "impress financial sources.'2 1 Scottish Development Agency, Small Manufacturing Firms in Scotland: A Survey of Their Problems and Needs (1978). 2 G. Hills, "Market Analysis in the Business Plan: Venture Capitalists' Perceptions,' Journal of Small Business Management (January 1985), pp. 38-46. More and better market analysis is obviously required. With this in mind, a pilot survey was undertaken to assess the extent to which marketing was used in small manufacturing firms in Scotland. Pricing, promotion, distribution, and product policy were among the areas examined. Other questions about competitive position and perception of the marketing environment sought to determine how marketing-oriented firms were. BACKGROUND It has been pointed out that small firms lack a comprehensive marketing approach3 and tend to be established on the basis of a proven technical proficiency,4 with marketing relegated to a simple selling function. Allen has suggested that small firms should concentrate on products which do not require (a) large amounts of capital per unit of output, (b) heavy retooling costs, or (c) heavy marketing and administration costs relative to other costs.5 Small firms tend to be more successful when they adopt concentrated marketing segmentation strategies, with products tailored and targeted accordingly.6 3 L. M. Lamont, "Marketing Industrial Technology in the Small Business,' Journal of Marketing Management (October 1972), pp. 387-396; D. Ford and T. P. Rowley, "Marketing and the Small Industrial Firm,' Management Decision, vol. 17, no. 2 (1979), pp. 144-157; and H. H. Jackson, D. K. Hawes, and F. M. Hertel, "Pricing and Advertising Practices in Small Retail Businesses,' American Journal of Small Business, vol. 4, no. 2 (1979), p. 22-35. 4 E. H. Fram, Small Business Marketing (New York: Oceana Publications, 1969). 5 L. L. Allen, "Factors Affecting the Profitability of Small Firms,' in The Vital Majority, ed. J. Carson (1973), pp. 241-252. 6 W. Brannen, Successful Marketing for your Small Business (Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1980); D. Howell, G. L. Frazier, and P. R. Stephenson, "Using Industry Data in Small Business Decision Making: Potential Problems,' "Journal of Small Business Management (April 1982), pp. 45-56. Golby and Johns7 suggest that a small firm's strength usually derives from the ability to provide a specific service competitively. Davies and Kelly8 state that limited markets, too small to be considered by large firms, provide the biggest opportunities for small firms. …