Marketing for the Small Business: An Overview


One great need of small business managers is to understand and
develop marketing programs for their products and services. Long
term small business success depends on the ability to maintain a
strong body of satisfied customers while continually increasing
this body with new customers. Modern marketing programs build
around the marketing concept, which directs managers to focus their
efforts on identifying, satisfying, and following up the customer’s
needs – all at a profit.


The marketing concept rests on the importance of customers to a firm. All
company policies and activities should be aimed at satisfying customer
needs while obtaining a profitable rather than maximum sales volume.

To use the marketing concept, a small business should:

1) Determine the needs of their customers
(marketing research).
2) Develop their competitive advantages (market
3) Select specific markets to serve (target
4) Determine how to satisfy those needs (marketing
5) Analyze how well they’ve served their
customers, and then return to step 1
(marketing performance).


The aim of market research is to find out who the customers are, what the
customers want, where and when they want it. This research can also expose
problems in the current product or service, and find areas for expansion of
current services to fill customer demand. Market research should also
encompass identifying trends that may affect sales and profit levels.

Market research should give you more information, however, than just who
your customers are. Use this information to determine matters such as your
market share, the effectiveness of your advertising and promotions, and the
response to new product developments that you have introduced into the

For once, small business holds an edge. While larger companies hire
professionals to do their research, small business managers are close to
their customers. They can learn much more quickly the likes and dislikes of
their customers and can react quickly to change in customer buying habits.

What to look for

Market research should investigate four areas: customers, customer needs,
competition, and trends. The research conducted should answer questions

* Customers. Identify their:
family size
marital status
interests and hobbies

* Customers wants
is the product needed for a limited time
(diapers, for example)?
are customers looking for quicker service?
do customers want guarantees with the products?
will customer come frequently (for example a
grocery store) or seldom (a car dealership)?
are customers looking for a wider distribution
or more convenient locations?

* Competition
what is the competitions’ market share?
how much sales volume do they do?
how many similar firms exist?
what attracts customers to them?
what strengths do they advertise?

* Trends. Are there:
Population shifts? (Baby boom, for example)
Legal or regulatory developments?
Changes in the local economic situation?
Lifestyle changes? (single parents, working
women, smaller family size)

Where to get it

There are two general sources of information that can be gathered: data
already available and data that can be collected by the business.

The following sources may provide already accessible data:
* Department of Commerce
* Local area Chamber of Commerce
* Trade associations in the line of business
* Professional market research services
* Local library

Data can also be obtained by the business’ own research efforts through the
following means:
* Telephone surveys
* Local and national newspapers
* Surveys sent by mail
* Questionnaires
* Local TV and radio stations
* Interviewing
* Customer service cards

Market research doesn’t have to be sophisticated and expensive. While money
can be spent to collect research data, there are many inexpensive ways to
collect this data that are easily accessible to the small business owner.
Several of these methods are:

Employees. This is one of the best sources of information about customer
likes and dislikes. Usually employees work more directly with customers and
hear complaints that may not make it to the owner. They are also aware
of the items customers request that the business doesn’t offer. They can
probably also give a pretty good customer profile from their day-to-day

Customers. Talk to the customers to get a feel for you clientele, and ask
them where improvements can be made. Encouraging and collecting customer
comments and suggestions is an effective form of research. By asking the
customers to explain how the product could improve to fill their needs,
constructive market research is done, as well as instilling customer
confidence in the product.

Competition. Monitoring the competition can be a valuable source of
information. Their activities may provide important information about
customer demand that were overlooked, and they may be capturing part of
the market by offering something unique. Likewise, small business owners
can capitalize on unique points of their products that the competition
does not offer.

Company records and files. Looking at company records and files can be
very informative. Look at sales records, complaints, receipts, or any other
records that can show you where your customers live or work or how and what
they buy. One small business owner found that addresses on cash receipts
allowed the pinpointing of customers in his market area. With this kind of
information he could cross reference his customers’ address and the
products they purchased. From this information he was able to check the
effectiveness of his advertising placement. However, realize that this
information represents the past. Present or future trends may mean that
past information is too obsolete to be effective.

Your customers’ addresses alone can tell you a lot about them. You can
pretty closely guess your customers’ life-style by knowing what the
neighborhoods they live in are like. Knowing how they live can give you
solid hints on what they can be expected to buy.

In addition, check returned items to see if there is a pattern. Check
company files to determine which items sell best, and which sell poorly.

Use creative methods to collect information. All market research doesn’t
have to be done with numbers and surveys. It can be done with peanuts, as
one creative discount merchandiser discovered. During a three-day promotion
the merchant gave away free to customers “…all the roasted peanuts you
can eat while shopping our store.” By the end of the promotion the merchant
had “litter trails” that provided information on the traffic pattern within
the store. Trampled peanut hulls were littering the most heavily traveled
store aisles and even heaping up in front of displays of merchandise of
special interest to customers. In short, the merchant learned how they
acted in the store and what they wanted and observed their behavior.

The key to effective marketing research is neither technique nor data –
it’s useful information. Customers likes and dislikes are shifting
constantly so this information must be timely. It’s much better to get
there on time with a little than too late with a lot.


With the research information gathered, the next step is to develop a
market strategy. Use this information to determine areas where the
competition doesn’t adequately fill consumer demand or areas where a new
product or different product promotion would capture part of the market.

A new business may capture a significant market share by aiming their
market strategy on areas not focused on by the competition. Some examples
of the various areas of emphasis include offering a:
* Better or wider distribution
* Specialized instead of a broad product line
(or vise versa)
* Lower price
* Modified product (improved)
* Better value for the consumers money
* More dependable product or service
* Customer support service

As a new business can enter an industry and capture a share of the market,
an established business can use the same strategies to increase their
market share as well.


When the marketing strategy is developed, determine with which customer
group this would be most effective. For example, a “better value for the
money” may be more appealing to the “family” consumer group while a “wider
distribution” would be more attractive to consumers who travel. Remember
that different market strategies may appeal to different target markets.
Therefore, apply the collected data to choose the combinations that will
work best.

The market is defined by different segments. Some examples are:

Specialize products to customers who live in certain neighborhoods or
regions, or under particular climates.

Direct advertising to families, retired people, or to the occupation of

Target promotion to the opinions or attitudes of the customers (political
or religious, for example).

Product benefits
Aim marketing to emphasize the benefits of the product or service that
would appeal to consumers who buy for this reason in particular (low cost
or easy access, for example).

Previous customers
Identify and promote to those groups who have purchased the product before.


Before the marketing mix decision is made, determine what purpose these
marketing efforts are going to serve. Are they to:
* Deepen the customer base?
* Increase the market share? If so, by how much?
* Increase sales? If so, by how much?
* Reach new geographic markets?
* Increase customer traffic?
* Sell remaining inventory to prepare for a new
* product line?

After these objectives are established, determine a date for accomplishing
the objective.

The marketing mix allows owner-managers to combine different marketing
decision areas such as products and services, promotion and advertising,
pricing, and place to construct an overall marketing program.

Products and Services

Use the product or service itself as a marketing resource. Having something
unique provides motivation behind advertising. While the ideas mentioned
under market strategy apply here, another option is to change or modify the
product or service. Additional attention may be given to a product if it
has changed color, size, or style, while a service may draw similar
attention by modifying the services provided. Remember sales and
promotional opportunities are generated by product differentiation.

Promotion and Advertising

With a marketing strategy and clear objectives outlined, use advertising to
get the message out to customers. Advertising can be done through:
* The yellow pages
* A press release
* Sponsoring a civic event or activity
* The newspaper
* Billboards or posters
* Flyers or handbills
* Direct mail advertising
* The radio

One element of advertising is promotional activities. These activities not
only advertise, but they offer added incentive for customer patronage. Some
examples are:
* 2 for 1 offers
* Coupons
* Special sale prices
* Rebates
* Sweepstakes
* Give-aways

Try to reach the largest number of people with the money allocated to
advertising and promotion. This may be accomplished by using several
different methods of advertising. Remember to be creative and implement


Determining price levels and pricing policies is the major factor affecting
revenue. Factors such as the demand for the good, the market price, and
customer responsiveness to price changes influence the price levels. Other
factors such as a convenient location or more personalized service may
allow a small business to charge a higher price. Make sure your price is
competitive, however, by checking to see what competitors’ prices are.


The manufacturer and wholesaler must decide how to distribute their
products. Working through established distributors or manufacturers’ agent
generally is most feasible for small manufacturers. Small retailers should
consider cost and traffic flow as two major factors in location site
selection, especially since advertising and rent can be reciprocal. In
other words, low-cost, low-customer traffic location means you must spend
more on advertising to build traffic.

The nature of the product or service also is important in locational
decisions. If purchases are made largely on impulse (e.g., flavored
popcorn), then high customer traffic and visibility are critical. On the
other hand, location is less a concern for products or services that
customers are willing to go out of their way to find (e.g., restaurant
suppliers). The recent availability of highly segmented mailing lists
(purchased from list brokers, magazines, or other companies) has enabled
small businesses to operate anywhere – and serve national or international


After the marketing mix decision is implemented, the next step is to
evaluate performance. With a detailed list of company objectives, monitor
how well the decisions are developing. Evaluate objectives such as:
* Market share. Has the increased share been
* Sales Volume. Was the increase reached?
* Strategy. Did the combinations of target markets
and strategy work effectively? Which ones didn’t?

Also, evaluate the following decisions and others:
* Did advertising efforts reach the target groups?
* Were promotions timely?
* Did customers respond to sales, coupons, or

Additionally, consider the following:
* Is the company doing all it can to satisfy the
* Do the employees make sure the customer’s
needs are truly satisfied, leading to the
vial repeat purchase and customer loyalty?
* Is it easy for customers to find what they want
at a competitive price?

If these objectives were not reached, what were the reasons? If they
worked well, what elements were most effective? By evaluating performance
after decisions, there is reference for future decision-making, based on
past results.

In addition, periodically assess customers’ feelings and opinions toward
the business and how well their needs are being satisfied. This can be done
through surveys, customer comment cards, or simply by asking them, “How are
we doing?”

Assessing performance and asking for customer input brings us back around
market research again. Your marketing plan is a continuous effort to
identify and adapt to changes in markets, customer taste, and the economy
for the success of your small business.

About author

SMB Reviews
SMB Reviews 473 posts

SMBReviews is committed to providing small and mid-sized business owners with the information and resources they need to select the best service or product for their company.

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