Kaveh Moravej

Use of Marketing Intelligence In SMEs Can Help Drive Economic Growth

Some very interesting research from the journal of Marketing Intelligence & Planning looking at how improving marketing intelligence capabilities in SMEs (small and medium size enterprises) can help to drive local and national economic growth:

Companies that are able to identify, collect and analyse information about the external environment can make better decisions (Levy and Powell, 2005); in particular, those SMEs that use marketing information frequently are seen to be more successful than those that do not use that information (Fuellhart and Glasmeier, 2003). SMEs growth is highly valued by governments, because of their socio-economic impact at both local and national level, and the development of local economies and rural regions is at the top of policy makers? agendas (Mitra, 2011). Governments have increasingly implemented subsidy policies over the years in order to develop local economies because growing companies contribute positively to regional and national growth (Kuratko, 2008).

The research by L.A. Cacciolatti and A. Fearne also reminds us that information and intelligence are not the same thing, and that marketing intelligence leads to better performance:

The collection of marketing information is possible through marketing intelligence, although information is not always easy to collect (Harrigan et al., 2008)...The use of marketing intelligence and the use of marketing information are not synonyms; however, these two activities are closely interconnected. Marketing intelligence is the action of gathering marketing data. From those data, useful information will be
extracted (and used) by the firm. Companies engaging in marketing intelligence show better performance (Kirca et al., 2005).

Another key point is that transforming data and information into intelligence leads to improved adaptability:

It is recognised (Kirca et al., 2005) that those companies which are making better use of information show an improved ability to develop ?an effective response to changes in the marketplace? (p. 25)...Marketing intelligence enables the company to collect information about both the internal and external environment that can be used to improve the accuracy and precision of the marketing decisions as well as allowing the company to react faster to changes in the market or environment (Kirca et al., 2005)...An improvement in marketing decision making can be achieved through marketing intelligence (Thong, 2001).

Although the authors argue that small companies gain knowledge by sharing information, in my experience this is seldom the case. Perhaps casual information sharing, but nothing systematic. Should SMEs build marketing intelligence partnerships? Perhaps pooling limited resources into a unified body that develops related skills would allow them to make better decisions and to take on bigger competitors:

...there are often difficulties in acquiring information (Yeoh, 2005) as the quantity and variety of information is wide, with data relating to suppliers, buyers, customers or consumers, competitors and socio-economic trends (Peters and Brush, 1996). Nevertheless, the information collected can help with the identification of opportunities (Westhead et al., 2009), and can reduce uncertainty in business activities (Kaplan and Warren, 2007) because firms can make better informed decisions (Spender and Kessler, 1995). However, not all companies make good use of formalised marketing information and both SME characteristics and owner-managers? personal characteristics may play an important role in explaining the different usage of marketing information.

They go on to argue that instead of casual information gathered from friends, family and customers, SMEs need formalised and accurate marketing information:

The main types and sources of marketing information used by SMEs are mostly of an informal nature ( Johnson and Kuehn, 1987). However, we would argue what SMEs need is formalised marketing information. Formalised marketing information includes data on: suppliers, buyers, competitors and trends (i.e. national, global, economic, socio-cultural and technological) (Peters and Brush, 1996, p. 81). Accurate information should be seen as being helpful to the company (as it is instrumental to its decision making) and therefore also to be considered important.

Another important point that they make is that your intelligence and knowledge is only as good as the quality of the sources that it is built on:

In the same way as for the type of information acquired, also the quality and reliability of the source of information used should be instrumental to the SME marketing decision-making process and may contribute to a higher or lower use of information. We support the idea that business-owners need to adopt a systematic, skilful way of collecting, analysing and monitoring certain amounts of quality information from the marketplace in order to minimise risk when planning marketing activities. It seems sensible to us to propose that the more marketing information is used to support decision making, the greater is the probability that the company will make the right choices within their competitive environment...

As always though, you need to know what you are looking for before you can collect it and they state that a lack of expertise in identifying the sources of information limits SMEs? information acquisition and utilisation.

The authors further point out a number of important correlations: Firstly, the ability to discern amongst types of information is positively affected by the level of resources allocated to marketing intelligence. Secondly, the ability to discern amongst types of information is positively affected by the firm?s adoption of a specific targeting strategy. Lastly, the ability to discern amongst sources of information is positively affected by the firm?s size.

The size of a business also influences whether and how it uses marketing intelligence. They find that firm size plays a highly significant role in how much attention is paid to the relevancy of a source. Smaller businesses have difficulty in discriminating between relevant and irrelevant sources of information, which leads to a negative impact on accurate decision-making.

They conclude by considering the implications of the study for wider economic policies and SMEs:

Identifying which SMEs are more likely to make better use of information is paramount if we are to maximise the potential benefits deriving from responsible public expenditure. A second implication for policy makers consists in the provision of marketing training. SMEs with relevant marketing know-how can identify their information needs better and they can lean towards a more structured approach to marketing overall. However, this also bears implications for SMEs? owners: SMEs? owner-managers should try to invest in relevant marketing training so as to be able to improve their marketing decision making. SMEs with higher marketing expertise may be more likely to engage in using marketing intelligence and may see the value of acquiring information in order to better inform their marketing decision making, influencing in this way their marketing strategy.

The full paper is recommended reading, goes into much more depth on these issues, and is available for purchase on the journal's website.

Photo: Shashi Bellamkonda