With over three million small businesses in the UK the application of marketing principles and practice and an understanding of small business strategies is an important topic for managers. 

Marketing is often seen by small businesses as peripheral.  When businesses are doing well, there is little urgency for marketing.  It is only when things start to go wrong or some barrier to growth is reached that marketing becomes a central concern.  Small businesses have limited resources and marketing is often viewed as costly in terms of financial resources and managerial time.  Many small businesses do not have functionalised structures, and frequently one person is involved in most or all decisions.  Consequently, they have to divide their time between a wide range of conflicting demands and managerial functions.  In these circumstances is a proactive approach to marketing an expensive irrelevance? 

Small business owners and managers are frequently categorised as failing to plan, of being reactive rather than proactive, and lacking a strategic approach to business management.  Studies have shown small business owners to be reluctant to undertake market planning (in a formal sense, anyway), but perhaps this is because outsiders do not fully understand strategy and marketing as it relates to small businesses.  The wrong questions are asked and, too often the "4Ps" framework is imposed and outsiders accept at face value the apparent inability or unwillingness of small businesses "to practice marketing". 

New methodologies and new approaches are called for that provide an understanding of strategy and marketing in the small business context.  Many small businesses do survive, they do grow and bring new products and services to the market, and are close to their customers.  Many do practice marketing and are successful strategists.  Even businesses that do not wish to grow beyond a certain level need to adapt to changing environments and changing customer needs. 

Some University of Bradford's research examines how marketing is practised in new small businesses; it looks at how marketing can be used to improve performance, and at the key issues in small business growth and development.  Recently-established small businesses were asked to indicate how important certain key tasks were in running their business (apart from producing the product or service).  The most important factor was "people management", the second was concerned with financial and general administration, and the third was marketing -which product or service should they sell and to which customers.  The sample of 308 small businesses was divided into "low" and "high" performers. 

The research found considerable variation in the sophistication of marketing practice between small businesses.  Although customer-orientated, there was limited evidence of identifying clearly defined groups of customers to serve other than on the price / quality/ service basis.  Price was a key issue with much evidence of businesses trying to undercut the competition. 

Interestingly, given the current emphasis on relationship marketing, relationships and word-of-mouth advocacy were the preferred methods of communication.  This was accompanied by strong negative associations with advertising.  Planning tended to be informal and not documented.  However, marketing was practised to some degree in all the small businesses and those with a more coherent marketing strategy were generally more successful.  The marketing practices were highly market and situation specific. 

Those business owners who wish to create prosperous and thriving businesses need a clear understanding of basic marketing principles and techniques.  This does not mean complex theories or sophisticated highly formalised procedures.  Small business owners and managers have close working relationships with their customers and staff.  They spend many hours working together, talking about the job, the business, the customers, what they are going to do tomorrow, and how they are going to tackle the next problem. 

But they need to spend some time periodically - perhaps every three months or so -to sit down and think / talk about where they are now, what is happening in their particular market(s) and where their business is going in the future: basic strategy issues.  The fundamental concepts of profitability, customer-orientation and focus, market segmentation, targeting and positioning and competitive position apply to small and large business.  These concepts can be applied without massive information sources and sophisticated data analysis techniques. 

Most of the business people researched referred to the importance of talking to people (customers and others) in their business environment.  It was apparent that interpersonal relationships are important as a way of doing business.  This is the area where small business owners have the advantage.  Many small businesses are undertaking their strategic marketing and development in ways that are viewed as the general way forward, eg. relationship marketing and practices such as trade marketing.  Small businesses should use their advantage to its maximum.  It will help them survive and grow.