Marketing Strategies channels for SMEs
Marketing strategies and channels that are vital to SMEs
In today’s competitive landscape where trends inevitably come and go, the success of a business heavily depends on its ability to market its products and services.
Based on Bank Negara Malaysia’s SME Finance Survey 2018, the biggest constraint to SME growth is the increasing competition among SMEs (69%), followed by fluctuating consumer demand (51%). Due to resource constraints, distinct organisation structures and management styles, the conventional marketing theories adopted by large enterprises may not apply to the context of SMEs. One major difference is the overt presence of business owners who influence marketing through their vision, personality, knowledge, business style and personal networks.
The 4Ps of Marketing for SMEs
Due to their size and nimbleness, SMEs are in a unique position to cultivate intimate customer relationships and connect with them in innovative ways. SMEs are thus able to derive market value from building strong customer loyalty and network relationships. Here are the four elements that frame a self-branding model for SMEs:
SME owners often adopt a personal and self-reflective perspective of their business. By implementing their personal attributes, they can develop an effective marketing strategy that cannot be easily replicated. Owners can also become brand champions for their own businesses, which will further differentiate them from others. This could also lead to the owners themselves being viewed as effective, knowledgeable and well-connected individuals. However, the perception of SME owners as the brand might pose problems as the business grows and delegation becomes more complicated.
It is essential for an SME to maintain good long-term relationships with its customers and suppliers. Constant hard work is required from business owners to obtain new relationships while maintaining existing ones. The perseverance of networking over a long period of time is necessary to ensure a consistent flow of new customers and recurring sales from loyal satisfied customers.
SME marketing is typically focused on day-to-day tasks, which mostly involve customer engagement to solve problems. Due to this, marketing plans often naturally arise from interactions between SME owners and their customers. However, this tends to lead to short-term marketing strategies that are basic, unplanned and uncontrolled – addressing only immediate business needs. SMEs need to revisit their marketing plan and activities from time to time to achive their longer-term business goals and make their marketing strategy a success.
SMEs typically use a “personal” approach whereby they produce goods and services based on customer specifications, thus meeting their needs. SMEs could go a step further and consider co-producing products with suppliers or other SMEs that are highly desirable and marketable. These collaborations could also lead to higher brand awareness through leveraging each other’s customer base.
Niche Marketing Strategy
Niche markets comprise consumers with specific demographic, purchase behaviour and lifestyle; or a section of the market whose needs are not fulfilled. A niche market strategy focuses on achieving product differentiation and building close consumer relationships. The strategy fits SMEs well as it helps them identify a unique positioning within the hyper-competitive and over-advertised marketplace, support long-term relationships with customers, and save on marketing costs by focusing on a much narrower market.
A smaller customer base also allows SMEs to know their customers very well, enabling them to better satisfy their customers and build stronger loyalty for sustainable profits. In addition, a reputation built on trust and commitment will help the business attract new customers. It may be more profitable to manage reputation within small market niches as compared to expanding beyond existing capabilities. The Strategic Planning Institute stated that the average return on investment from smaller markets is 27%, while that from larger markets is only 21%.
Online Marketing Channels
''Word of Mouth'', the marketing traditionally used by SMEs, has been replaced by “Word of Mouse” and social media. Many have turned to online advertising due to lower costs and the ability to easily target specific audience groups.
SMEs should create an official website to increase the accessibility of their offerings and information to their consumers. In today’s digital world, a business website or online presence often makes the first impression. To drive traffic to their websites, businesses must work on Search Engine Optimisation (SEO), which means using keywords favoured by Google’s algorithm to rank higher up on searches. For businesses with a physical location, Google My Business is a free tool that makes businesses appear on top of the list when searched by consumers in the same location or nearby.
Businesses should also integrate social media with their websites as a positive social media presence can drive even more traffic to the website and improve on search engine rank. As managing social media requires consistent effort, businesses should pick the social media platforms that best match their target demographic and which would most likely convert their followers to customers. Here‘s a breakdown of the top social media platforms and their demographics:
The number one platform for adults has a predominant demographic of users aged between 25 and 34, of which 44% are female and 56% male. Facebook is considered one of the best platforms for advertising as its older demographic translates to higher purchasing power. Apart from being relatively cheap to run ads, its system also allows businesses to target their audience by age, interests, behaviour and location, which can be incredibly powerful if businesses understand their consumer base very well.
The online photo-sharing app has proved its staying power by surpassing the 1 billion global user mark in 2020. The largest user base of Instagram is aged between 25 to 34 and is comprised of 57% female and 43% male users respectively. Instagram stated that 87% of its users’ purchase behaviour is driven by influencers and 70% of users turn to the app for product discovery. Standard image posts and Instagram Stories are touted to be the most effective types of content for businesses to market their brand, product and services.
The top messaging app in Malaysia (97% of the population uses it daily) enables small businesses to reach out to a wide customer base. It is an effective platform for promotions as marketing text messages have an average open rate of 98%. Businesses can automate message responses by saving messages to quickly reply to customers’ commonly asked questions. Customers can also be organised through custom labels, and businesses can broadcast messages to specific groups for targeted marketing.
The fastest growing social media platform of all time has a main demographic of users aged between 18 to 24 comprising 59% female and 41% male users respectively. TikTok is a crucial platform in social media marketing for businesses that are targeting Generation Z and younger millennials. Having said that, it would be wise not to overlook this platform. After all, many top business social media accounts first grew their audiences from a young user base.
Develop your best marketing strategy
Marketing has evolved over time, shifting its focus from transactions to relationships. Today, the most effective marketing strategies focus on customer loyalty to build a series of sales out of a single transaction. As SME marketing practices and SME owners are irrevocably linked, SME owners can utilise their entrepreneurial personality to create a unique and innovative brand that can be easily marketable. It is also beneficial for SMEs to adopt a niche market strategy, which offers a competitive advantage by making it easier to build strong consumer relationships and a solid reputation. Despite the costs demanded from SMEs to invest in marketing, benefits are worth it as effective marketing reduces customer acquisition costs in the long run. When businesses reach what seems to be a dead end, do remember that marketing strategies are almost endless and only limited by resources and creativity. Like the paradox of the chicken and egg situation, in marketing you can find customers for your product, or find products for your customers.
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