Genowefa Sobczyk
Marketing Orientation of Small Firms
During Polish Economy
Transformation
Annales Universitatis Mariae Curie-Skłodowska. Sectio H, Oeconomia 28, 53-59
U N I V E R S I T A T I S M A R I A E C U R I E - S K L O D O W S K A L U B L I N — P O L O N I A
VOL. XXVI.II, 4 SECTIO H 1994 Z a k ł a d E k o n o m i k i P r z e m y s ł u
W y d z i a łu E k o n o m ic z n e g o U M C S
G e n o w e f a S O B C Z Y K
Marketing Orientation of Small Firms During Polish Economy Transformation
O rientacja m a rk etin g o w a m ałych firm podczas transform acja p olsk iej gospodarki
R EA SO N S FOR A P P L Y IN G THE M A R K ETIN G O R IEN TA TIO N
Polish econom y consequently ten ds to w ard m a rk e t system . Developed m ark e t econom y is characterized by apppearance of m an y independent economic subjects acting the dem and and supiply rules, active com pe titio n and free prices creating as w ell as capital allocation. Experiences of such economics show th a t arisin g and developm ent of sm all firm s can be dynam ic factors for econom y and accelerative ones for s tru c tu ra l chan ges. In Polish conditions, th e developing sector of sm all business is an essential elem en t of p ro p e rty tra n sfo rm atio n The dynam ic q u a n tita tiv e increase of these subjects w as sta rte d in 1989, w hen form al, legal and political b a rrie rs of p riv a te business developm ent w ere broken. F o r m er m ark e t effects of sm all and m edium e n te rp rises activities of various organizing-legal ty p es are significant . and consist in bridging a gap in production s tru c tu re and clients su p po rt, p laying an im p o rta n t role in reconstruction of m ark e t balance as w ell as increasing particip ation in creating new w ork places and national product.
In m a rk e t econom y conditions, businessm en in th e ir activities have, in general, to tak e into account th e m ark etin g orientatio n. M arketing activ ity conception is based on th e follow ing rules 1:
1) p rio rity of custom ers’ needs, th a t is conscious orien tatio n of all firm ’s activities to sale and client in o rd er to recognize w ell clien ts’ needs and to satisfy them fu lly ;
1 H. M e f f e r t : M arketing. G ru n d lan gen der A b satzp olitik , G abler, W iesbaden 1986, s. 31.
54 G en o w efa Sobczyk
2) continuous observation and inv estigatio n of th e m ark et, th a t is a requ isite and precedes e n te rp ris e ’s decisions concerning its m ark e t offers;
3) sy stem atical influence and shaping th e m ark e t w ith sy stem of in stru m e n ts being th e so-called m ark etin g -m ix described in the m ark e tin g program .
In a broad sense, m ark etin g strateg y m eans th e choice of purposes, kinds, bases or rules th& t'in th e p a rtic u la r period d irect e n te rp rise ’s m a r k eting activ ity, set sizes, com binations and allocations of m eans depending on changing m ark e t situ atio n (environm ental conditions ancl com petition) 2. A n o th er definition of m arketin g describes it as a system of approaching successes on m ark e t due to o rien tatio n tow ard custom ers, p e rm a n e n t in vestigation and learning th e ir needs, production and su p portin g th e products to custom ers — to g eth er w ith inform ation and prom otion — in th e rig h t tim e, rig h t places and rig h t prices 3. T hus m ark e tin g stra te g y m eans th a t th e m ost im p o rta n t aim for b u sin essm an’s decisions is the consum er — th e final cu sto m er of goods and services on m ark et. E n te r p rise acting according to m ark e tin g conception not only can satisfy the custom ers’ dem ands b u t also reach its ow n economic b e n e fit in shape of resources rationalization and p ro fit m axim ization.
M arketing o rientatio n u sually form s in conditions w hen th e re are th a t m ake firm s change th e ir w ay of acting on th e m ark et. Such phen o m ena m ost often arise in th e situ atio n of th e b u y e r’s m ark et. D evelopm ent phases of general firm ’s o rientation th a t precede m ark etin g conception are production and sale conception 4. P ro d u ctio n o rientation of an e n te r p rise functioning is focused on production process and th e product; it u su a lly form s in conditions of resources and p ro d u ct dem and lim itations. In sale (distributive) phase the im portance of th e m a rk e t arises and th e firm ’s effort concen trates on a sale of produced goods w ith o u t an e a rlie r dem and recognition.
M arket o rien tatio n as a base for m arketin g concentrates on m ark e t investigations w hile m aking o p erative and strateg ical decisions as w ell as application of in stru m e n ta l system s for firm and m ark e t interactions. The com position of v arious m eans and form s of a c tiv ity is used in p ro p er ratio, w ith less o r m ore intensification depending on actual e n te rp rise ’s situation, kind of sold products, m ark e t featu res, consum er attrib u tes, sale system and th e like. T hey are included in an in teg rated system
2 P. K o t l e r: M arketing M anagem en t. A n a ly sis, P la n n in g and C ontrol, P r e n tic e H all, E n glew ood C liffs 1980, s. 14.
* T. S z t u c k i : M arketing. Sposób m y ślen ia — sy stem d ziałan ia, A gen cja W y d a w n icza „ P la cet”, W arszaw a 1992, s. 44.
com prising th e p ro d u ct, its equip m en t, price, d istrib u tio n and prom otion (services).
The aim of ow n investigations of sm all and m edium firm s (m ainly priv ate) carried out in 1992— 1993 in L u b lin region w as to define th eir m a rk e t situation, know ing th e m ark etin g conception and its role in p ra c tical firm activities. R esults of this research are p resen ted in subsequent
chapters.
E X T E N T A N D M A RK ET ST RU CTU RE OF SM A LL FIRM S
Conditions in w hich p riv a te firm s arise and fu nctio n are such th at, at th e m om ent of reg istration , th e ir ow ners declare to c a rry a broad range of economic a c tiv ity th a t is p ro d u ctiv e-trad in g -serv ice. In p ractice, a great n u m b er of th em are engaged only in tra d e or also production and services b u t w ith little p articip a tio n in sale as a whole. T rade individuals h avng su p e rio rity in th e p riv a te sector of sm all business also displayed the largest d evelo p m ent dynam ics at th e beginning of th e 90s. The dynam ic developm ent of tra d e resu lted from th e possibility of fast reaching th e benefit, how ev er less th a n in p ro d u ctio n of capital in te n sity of firm starting, less stable costs and less p ro fit of carry ing th e activity.
The e x te n t of sm all firm s on th e m ark e t is in spatial an d real view m uch less th an th a t of big en terp rises. R elativ ely little p articip atio n on the m a rk e t u su a lly m eans high specialization of activ ity of sm all firm s. F o r m a jo rity of in v estig ated firm s (61%) dom estic m a rk e t (q u arter, city, district) was basal place of sale. A bout fo u rth p a rt of all goods and s e r vices offer w ere d ire c te d to w hole co u n try and 13% of investigated firm s carried out an ex p ort. Some p a rt of economic individuals declared s t a r ting activ ities leoding to beginning of ex p o rt of both p ro d u cts and ser - vices (m ainly constructional). O ver h a lf of investigated firm judged th a t produced and sold goods (services) fu lly covered th e needs of dom estic m ark et.
A sym p tom atic p h enom enon in th e economic activ ity of h alf of in vestigated firm s was th e decreasing m a rk e t fo r th e ir goods and services in
1992— 1993 com pared w ith 1991. In jud g em en t of th e rest, th e m ark et, eq u ally increased or stay ed th e sam e in rela tio n to th e last year. M ain reasons of red u c tio n of a c tiv ity field of p riv a te economic su b jects are: at lack of m o n eta ry m eans in investors, w rong cred it policy of the state, so cial im poverishm ent, prices increase, m a rk e t in u n d atio n by im ported goods, dom estic com petition. E n terp rises th a t spread th e ir selling m ark e ts m r iv a te d th is favorable change by increasing th e ir offer and activ ity area as w ell as ap plication of com petitive prices for goods and services.
56 G en o w efa Sobczyk
The a ttrib u te of sm all firm m ark e t is grow ing com petition of in dividuals carry in g th e same, or sim ilar economic activ ity . Only 4% in vestigated firm s considered them selves as m onopolists on th e m a rk e t and for th e rest o th er p riv a te firm s, state firm s, im port, un reco rd ed w orkers, co-ops and foreign sub jects w ere com petitive. From rese a rc h it also re su lts th a t m ark et com petition has m ain ly price (65% of answ ers) c h a ra c te r w hich m eans th a t en terp rises should cope w ith price challenges of o th e r acting on m arket, economic subjects. Com petition realized b y significant n u m b er of firm s has o ut-of-price c h aracter and it is connected to aesthetics of package, access to goods and services, th e ir q u ality and design as w ell as having good m ark of firm o r product.
Every p a rtic ip a n t on th e m a rk e t judges th e resu lts of com petition e x i stence in a d iffe re n t way. Q uite positively, this phenom enon is ju d ged by consum ers. T here was asked a question about resu lts of co m p etition to sub jects taking p a rt in it. A lm ost 70% of investigated firm s s ta te d positive effects of com petition, th e re st found th em negative. To positive re su lts of com petition th e re w ere included first of all: im p rovem en t of goods (s r- vices) qu ality , price decrease, costs decrease due to im p ro vem en t of activ ity and m obilization fo r b e tte r w ork, b e tte r a tte n d to clients. The offers of goods and services also recognize negative effects of com petition such as: lim itation of sale m arket, difficu lties of selling, incom plete usage of production possibilities, stopping of firm developm ent, necessity of m argin price m inim ization, u n fa ir price com petition of u n reg istered w orkers.
M A RK ET IN V E ST IG A T IO N S
M arket investigation is a condition of success and m a rk e t com petition of en terp rise; its aim is to learn of dem and and needs, m a rk e t su b ject stru ctu re, com petition, analysis of m arketin g in stru m e n ts th a t in te ra c t w ith m a r k e t 5. O bservation, in form ation g a th e rin g and analysis of m a rk e t phenom ena let to recognize th e successful chances an d avoid th e w rong localization, k ind of a c tiv ity and costs connected w ith it. T his is because such activities a re im p o rta n t for both firm s com ing in to being and existing ones. To describe th e m a rk e t m eans to find non-satisfied needs, to recognize th e d em and fo r products and services, prices, distrib u tio n , to investigate th e com petition. The condition of possible m a rk e t com peti tio n is to recognize th e com petitors, th e ir w eak and stro n g points, good and bad points of product, sale en v iro n m en t and so on. M ark et in vestiga
5 L. G a r b a r s k i , I. R u t k o w s k i , W. W r z o s e k : M ark etin g, PW E, W ar sza w a 1992, s. 131— 136.
tions become necessary and m uch m ore com plicated in face to p e rm an en t situation changes aro u nd sm all firm s. Costs of th e ir c arry in g also increase w hich sig n ifican tly lim its th e ir ran g e w ith lack of la rg e r financial re sources. Sim ple investigations (of sm all costs) som etim es give ap p ro xim ate b u t h e lp fu l resu lts 6. Thus, in sm all firm s, significant m eaning is connected w ith such ty p es of investigation as: d ire c t m a rk e t observation, questioning the clients, conversations w ith suppliers, w ritte n inform ation from banks, new spapers an d research institu tes.
The m ajo rity of investigated firm s declared th e carryin g of investiga tions before sta rtin g th e economic activity. A t present, d u rin g activ ity 90% fo firm s d ecleared m a rk e t investigation in a ivew of firm ’s dem ands for products (services), sale possibilities, prices, existing com petition. How ever, a n sw er to question ab o u t expenses for such investigations indicates th a t it w as m ade r a th e r occasionally d u rin g c u rre n t firm m an a gem ent. A m ong inv estig ated firm s, only few of th em com m issioned professional o rganisations to c a rry m ark eting investigations.
JU D G E M E N T OF M A R K ET IN G IN ST R U M E N T S A P P L Y IN G
Among fo u r tra d itio n ally view ed m ark etin g -m ix in stru m e n ts th e ap p li cation of vario u s p rom otion form s can be positively judged. It was not applied by ap pro x. 17% of in v estig ated firm s; th e y m o tiv ated th a t it was n ot necessary o r too expensive in relatio n to expected profits. T he m ain type of a d v e rtise m e n t w ere press and local radio ads. In th e n ex t place in respect of u n iv ersality of prom otion activities th ere is p articip ation in exhibitions an d fa ir as w ell as s tre e t a d v e rts (large illu stratio n s, sign- - boards, inscrip tio n s on m eans of com m unication). C om plem entary form of prom otion w as edition of p ro d u ct catalogues, offers, canvassing, sen d ing ad vertisem ents. T here w ere n o t used such types of popularization of th e ir ow n activ ity as sponsoring, coupon sale and com plem entary prom o tion. Expenses assigned fo r prom otion activ ity w ere of d iffe re n t level and very low ; th ey w ere from several te n th of p e rc e n t to several p e rc e n t relativ e to an n u a l sales.
Price policy of th e firm can play sim ilar functio n of sale activization ajs goods and services prom otion. In strateg y of price settlem en t th e question is how to choose th e m ethods of th e ir level se ttle m en t depending on accepted c rite rio n of choice of p rice policy purposes (sale, p ro fit, p a rticip a tio n on th e m ark et) as w ell as w h e th e r to use th e discounts, in sta l
6 I. H e j d u k: M ark etin g w m ałej firm ie, „E konom , i O rganiz. P rzed się b io r s t w a ” 1992, 2, s. 9.
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m ents and cred it sale. T he m ost p o p u lar m ethod of price settlem en t in investigated firm s w as calculatio n of costs b o m by individuals relativ e to prices in com petitors. Q uite larg e group of sm all firm s applied the fo rm er m ethod: p ro d u ct’s price equals to costs plus defined p rice spread. Few producers, p a rticu la rly offerin g o v erstan d ard and fashionable things decided fo r price settlem en t on any level accepted by m ark et. A big care in detached connection of good and service prices w ith costs of producing them su rely resu lts from dem and barrier, decreasing th e production p ro fita b ility and w ill for k eeping th e p a rtic ip a tio n on th e m a rk e t on the same level.
Goods and services d istrib u tio n system effects sta b ility of firm ’s economic situation to a g re a t ex ten t. D istrib utio n channels in w hich products are m oved from p roductive sphere to fin al consum er should be shaped depending on ty p e of product, a ttrib u te s of th e m arket, e n te r p rise’s possibility. Sm all firm s h av e th e need of carry in g selective d istrib u tion stra te g y consisting in d ire c t sale (in services) and th ro u g h chosen types of tra d e units. In practice, it is h a rd to say about such desired d istrib u tio n direction. The goods and services sale of investigated firm s having various economic activ ity w as v e ry dispersed am ong d irect clients, sm all retailers, w holesalers and foreign co-operants an d m ediators. P roductive and sale firm s being engaged to w holesale o fte n pointed to stab le tra d in g contacts w ith som e group of consum ers. The m ost im p o rtan t consum er used to bu y u su ally sev eral to 30% of th e w hole offer. R esults from th e research also poin ted of th a t it is h a rd e r to come into p e rm an en t contact w ith receivers by re ta ile r and service individuals.
( In th e w hole of m ark etin g -m ix in stru m en ts th e p ro d u ct strateg y is first placed. A ctivities d irected to su bject of an o ffer are im p o rtan t condi tions of economic success of th e firm .
! E ssential decisions on p ro d u ct strateg y are follow ing: form ing of asso rtm en t and q u a lity of p ro d u cts, program m ing and investigation of p ro d u c t’s lifetim e cycle, giving th e m a rk e t a ttrib u te s to th e product th a t is n am e and m ark, g u a ra n tee system of a fte r-sa le services. In th e past practice of investigated firm s th ese in stru m e n ts of m ark etin g activity could be tre a te d as th e least developed. It re fe rs p a rtic u la rly to planning and rev iv al (developm ent) of pro d ucts on a base of know n needs, custom s and m otiv atio n s of m ark e t segm ents being supplied.
S T R E S Z C Z E N I E
W artyk u le przed staw ion o orien tację m a rk etin g o w ą m ałych i śred n ich p rzed się b io r stw na p o d sta w ie w y n ik ó w w ła sn y c h badań em p iryczn ych , p rzep row ad zo n y ch w region ie lu b elsk im . W szczególn ości zn ajd u ją w n im rozw in ięcie n a stęp u ją ce prob lem y: 1) p rzesłan k i i potrzeba sto so w a n ia orien ta cji m ark etin gow ej w d z ia ła l ności rozw ijającego się w p olsk iej gosp od arce sek tora m ałego b iznesu, 2) zasięg i stru k tu ra rynku m ałych firm oraz k on k u ren cja, 3) b adania rynku prow adzone przez p rzed sięb iorców , 4) ocena sto so w a n ia in stru m en tó w m a rk etin g o w y ch (prom ocji, p o li ty k i cen ow ej, sy stem u d ystryb u cji i stra teg ii produktu).
W p od su m ow an iu zw rócono u w a g ę na n ie w y k o r z y sty w a n ie jeszcze w p ełn i p rzez w ła ścicieli firm szans, jak ie stw arza p od ejście ryn k ow e w p rak tyczn ej ich d ziałaln ości.
