1.1 Introduction
Small firms marketing practices have been assessed in the context of existing models based on large firm practices. Probably, this is the reasons why small-scale marketing practices have generally been criticized as non-traditional, informal, short-term, and non-strategic. However, given that the marketing discipline is undergoing a transformation in some part of African countries with new paradigms emerging as relationship marketing, it is now appropriate to assess small firm practices in a broader and more contemporary perspective. To this end, this study examines the marketing practices of small-scale manufacturing business.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
Marketing practices of small-scale business involves the practical application of the marketing elements by small business enterprises. The new paradigm marketing concept as it relate to relationship marketing. The starting point for this study was a conversation about marketing in small firms, where the researcher found out that they agreed with Hisrich and Peters (1992) comment that entrepreneurs often have a limited understanding of marketing. Yet, as Coviello et al (2002) have noted, this may be because such criticisms are based on the practices of larger firms. Furthermore, there may be an issue about the imposition of academic norms of marketing which ignore many of specific elements of the contents of small firms marketing, small firms may not practices marketing but many, nonetheless survive and grow. In any case, study agrees that most small firms seemed to use a relationship approach to marketing.
Many people find the potential independence and financial rewards that can come from owning their business. Some however, hesitate to pursue their dreams because they do not think they have enough education, experience or money while some are simply afraid they might fail. Others cannot accept the idea that they can change their lives and that people like them could ever own a business. For some still, going into business is to eke-out living because they have lost their job and there are no other really available ways to earn a living or even survive. Whatever the reason, owning your business could be one of the most challenging, satisfying, demanding and rewarding step one takes in life. However, there are real risks and difficulties in starting any new business. These necessitate a proper feasibility study and better marketing practices. Many experts recognize marketing practice as a major problem and relevant solution to the growth of small-scale business.
In both the developed and developing countries the government is turning to small industries as a means of economic development and a veritable means of solving problems. It is also a seedbed of innovations, inventions and employment. At present, in Nigeria small-scale business assists in promoting the growth of the country’s economy, hence all the levels of governments at different times have policies which promote the growth and sustenance of small-scale business. Small-scale industry orientation is part of the Nigerian history. Evidence abounds in the communities of what successes our great grandparents made of their respective trading concerns, yam barns, cottage industries, and the like. The secret behind the successes of a self reliant strategy does not lie in any particular political philosophy, so much as the people attitude to enterprise and in the right incentive is adequate enough to make risk worthy business a necessity for the nation. There had been many policy actions by the government, governmental agencies and the private sector to promote Small and Medium Enterprises (SMEs) in Nigeria.
SMEs have contributed greatly to Nigeria development by provision of employment, marketing of goods and services and, growth and development of rural areas. It has also brought about the growth of indigenous entrepreneurship in Nigeria. A business whether small or big, simple or complex, private or public, is created to provide competitive prices. Business in Nigeria has been classified as small, medium and large. However, a small-scale industry can be defined by the criteria of project costs, capital cost, turnover by the employee etc. The Federal and State Ministries of Industry and Commerce have adopted, the criterion of installed fixed capital to determine what small-scale industry is, in this respect the value has varied from N60,000 in 1972 N159,000 in 1975, N250,000 in 1979 and N500,000 in 1986, to a fixed investment not more than N2,000,000 (two million naira) in 1992. These figures are exclusive of building and subject to government determination and land pervading objectives of public policy. In the wake of SAP and SFEM, this value has now been reviewed and subsequently increased to five million naira. Since this happened, there may be a need to classify the small-scale industry into MICRO and SUPER MICRO business, with a view to providing adequate incentives and protection for the former.
In the meantime, any business or enterprise below the upper limit of N250,000 and whose turnover exceed that of a cottage industry currently put at N500,000 per annum is small-scale industry. The National Directorate of Employment (NDE) concept of a small-scale industry had been fixed to a maximum of N35,000. However, there are many enterprise in Nigeria categorized as small businesses. Most of them are in the commercial sector and there is also trend now towards the service industry, hotels, restaurants, fast food etc.
Small-scale business, small-scale industries and small-scale entrepreneurship are used interchangeably to mean a small industry firm and will be used as such in this paper. Its deliberation was to refer to the operational definition. In Nigeria and worldwide the seem to be no specific definition of small business different authors, scholars, and school have different ideas as to differences in capital outlay, number of employees, sales turnover, fixed capital investment, available plant and machinery, market share and the levels of development these feature equally vary from one country to another.
In Nigeria, Third National Development Plan defined a small-scale business as a manufacturing establishment employing less than ten people or whose investment in machinery and equipment does not exceed six hundred thousand naira. The Central Bank of Nigeria in its credit guidelines, classified small-scale as those businesses with an annual income asset of less than half a million naira (N500,000). The Federal Government Small-scale Industry Development Plan of 1980 defined a small-scale business in Nigeria as any manufacturing process of service industry with a capital not exceeding N150,000 in manufacturing and equipment alone.
The Small-Scale Industries Association of Nigeria (1973) defined small-scale business as those having investment (That is, capital, land, building and equipment and of up to N60,000 pre SAP value) and employing not more than fifty persons.
Therefore, in Akwa Ibom State where the research was carried out, the activities that was conducted is to know the Marketing Practice of Small and Medium Enterprises (SMEs).
1.3 Statement of Problems
Nigeria rich human and material resources endowment give her the potential to become Africa’s largest economy and a major player in the global economy. But much of its potential has remained untapped, putting attainment of the millennium development goals by 2020 in jeopardy. Without a doubt, the private sector and of course Small and Medium Enterprises (SMEs) is the primary engine of growth of nation’s economy, in other to meet vision 2020.
The very low productivity of the private sector and the lack of diversification of the economy are due mainly to the inhospitable business environment, infrastructure deficiencies, poor security of lives and property and the use of obsolete business methods all acting as constraint. But many experts recognize marketing as a major problem and relevant solution to growth of small-scale business.
1.4 Aim and Objectives of Study
The aim of the study is to scrutinize the Marketing Practice of Small and Medium Enterprises (SMEs). In achieving this aim, the following specific objectives were laid out as follows:
- To investigate the role and relevance model of marketing in SMEs with the intention of validating or falsifying the model with a large questionnaire survey of SMEs
- To critically evaluate the likely value of the model for analyzing and predicting the behaviour of SMEs with regard to marketing and suggesting strategies for SMEs
- To improve their performance using marketing techniques and practices.
- To investigate and appropriately assess small firm practices in a broader and more contemporary perspective whether it conform with relationship marketing and marketing concept.
- To ascertain whether the incidence of business failure suggest a deficiency in the application of the appropriate marketing practices.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Does the value of model, analyzes and predicts the behaviour of SMEs with regard to marketing for SMEs?
- Does marketing technique and practice improve SMEs performance?
- Does marketing have profit level of small-scale manufacturing enterprise?
- What are the marketing practices of small-scale manufacturing businesses in Akwa Ibom State?
- What are the role and relevance model of marketing in SMEs with the intention of validating or falsifying the model with a large questionnaire survey of SMEs?
- To what extent has the small-scale manufacturing enterprise practices modern marketing concept including relationship marketing?
- In Akwa Ibom State is marketing of finish goods a problem facing small-scale manufacturing businesses?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
- H01: There is no significant relationship between marketing practices and the profit level of a small-scale business.
- H02: Small-scale businesses do not apply relationship marketing in their operations.
- H03: Marketing techniques and practices does not improve SMEs marketing performance in Nigeria
1.7 Significance of Study
The results of the study would provide an insight into the kind of marketing practices adopted by small-scale in accordance with the traditional expository tendencies of marketing concept, which focuses in satisfying the need and wants of target market profitably. This knowledge would no doubt help entrepreneurs, academics, scholars and marketing practitioners alike to keep abreast of current marketing practices of small-scale business. Essentially, the study would contribute immensely to the expansion of and improvement of theoretical base of marketing teachers in terms of practices common in small-scale businesses.
Consequently, the marketing graduates would through the help of this study be able to understand the marketing implications in small-scale businesses and also be aware of attracting, maintaining, building customers’ relationship and also efficiently and effectively handling customers’ complaint. Most especially translate theories into practices especially should he/she decides to run a small business outfit.
1.8 Scope of Study
The study focuses on the Marketing Practice of Small and Medium Enterprises (SMEs) using Akwa Ibom State as a case study. The study is concerned with small-scale businesses who operate within Uyo metropolis, therefore a study of this nature would by implementation have spanned beyond Akwa Ibom State and would have required duration exceeding two years to enable adequate survey to be carried out in ascertaining the marketing practices across the length and breadth of the country, Nigeria.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
