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Running a magazine concentrating on issues of small and medium enterprises and managing with limited resources is a like living life on the edge. In this rush of meeting deadlines,...

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Apr 2012

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Marketing

Want to go to Dalal Street? : Plan 3 years before...

Ashawin Marchant
Sep 2010

Deciding whether to ‘go public’ is one of the most important decisions a successful SME can make. ‘Going Public’ has many attractive opportunities to a growing company and its promoters and owners. It brings glamour and prestige, and is one of the acknowledgements of success in business. But, it is a complex process and involves many issues.

Recent research on marketing-finance interface has shown that budget allocation for marketing whether products, services or company has a brand and marketing efforts made during the growth and maturity matter financially at the time of borrowing funds from money lenders, getting equity participation from investors, FIs to going IPO.

This clearly addresses the value of marketing for value creation. For the successful entry to Dalal Street, owners and promoters must start looking into entry level marketing strategy to Dalal Street. The results from a large scale cross industry study indicate that firms’ pre-IPO marketing spending help reduce IPO under pricing and boost IPO trading in the stock exchanges subsequently. Although, IPOs has a major enemy - uncertainty – the good news is that rightful marketing at the time of public issue marketing can help reduce this risk.

Unlike multinationals and corporate companies, IPO size for SMEs is going to be comparatively smaller and fund allocation by SME promoters for pre-IPO marketing is not going to be as simple and sizeable to venture the techniques of marketing used over the years while dealing with large corporations.

Marketing has the great impact on creating market-based assets viz. value of intangible assets (brands, channels) and on share holder value.

SME owners have always misunderstood value of marketing as important business functions, leave aside branding. With increasing competition, globalization and growth challenge slowly many in visionary SME company management have started taking interest. They have also realised that in today’s world to grow even external finance is must. Without presenting company effectively to fund managers, investors and alike be them private, FIs or public, it is practically impossible to get the money. This has indirectly pressurised them to invest into marketing – SME owners know ignoring marketing is going to be a big risk and marketing is no more an expense component in financial statements. It is marketing skill and strategy in action helps a lot towards JVs, export marketing, new tie ups, market development, product finding, internal & international company brand creation and definitely these efforts produces results. Business world is now concerned with results on short term and long term basis. Also, there is a basic problem with SMEs about the ignorance to get benefit from various government policy and schemes. SMEs lack from the fundamentals in organization management, starting with defining Vision & Mission statements for the company. Further to this SME lack a systematic development of business plan and ROAD MAP for MARKETING & BUSINESS DEVELOPMENT.

The fact stands true for many of SMEs who may like to get benefited with opening of SME exchanges in the initial period but often lack the value creation for Outside-In business model. Lead managers. Investment & Merchant bankers in the first phase will look forward to power packed presentation for value-based system. SME promoters must start looking into this issue before it’s too far behind at the time of thinking of IPO route to raise fund for growth to beat competition and growth in business. They must pay attention to updating systems of marketing, customer & vendor management, enhance support from associates, chain development with employees and bankers to name a few. In short, increase Value of business.

As company grows, it is very important to receive regular advisory and assistance from a marketing expert and experienced to guide on matters leading to growth and value creation matters and of course a ROAD MAP before that. This will enable the entrepreneurs with more time to pursue other strategic matters.

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