Marketing

BUSINESS FIRST, MARKETING MUST: Importance v/s. Ignorance of Marketing

Ashawin Marchant
Aug 2011
Earlier we discussed about the success story of an enterprising family who believed in marketing and have understood its importance in business today.
 
Now, we look at the SME owner, who met the writer last year around the same time. With loads of tension and frustration, he was highly confused and looking for some magic to pull him out of business mess created by him. He came along with his chartered accountant, who explained the financial crisis the SME owner was undergoing and its possible implications, in case he fails to develop business in short time with new and more customers.
 
Fundamentally, he had made two mistakes. First, since last ten years, when he started his business in packaging, he heavily depended on one customer. There were few other customers which he developed in the mean time. The share of the major customer was 85% in his business. Due to the business given by one major customer, in last many years, of course, he was able to buy bigger place and expanded the capacity three fold. He also imported a modern machine with high tech printing for packaging. This customer of this SME, also with the challenging time in his business of food export, started looking for other suppliers who can offer competitive payment terms besides better rates, packaging being a major out going for him. As a result, he slowly started reducing his order quantity with this SME company, demanded better price and started making delayed payments and at the same time asking for relaxed payment terms. The owner who had never thought of this situation and taken for granted his relationship with the buyer as a life time.

He was shocked to notice that month by month his turnover was falling substantially. Now, he realised its impact on cash flow. As stated earlier, other 6-8 buyers were providing not even 15% of gross turn over and hence could not help him much. The investments he made in plant, machinery and other equipment were huge, yearly loan repayment to be made was in 7digit and plant was working that was operating before the bad time only at 30% capacity is now nowhere near breakeven.
 
He never thought about marketing his business any time in last one decade. In fact, he was always least bothered. He spent half of his business life with the very same customer and was optimistic about more business to flow in from the same customers once he had made necessary provisions to suit his requirements.
 
But, there is nothing like loyal customers now, and taking customers granted for life time is the biggest mistake SME owners make.
 
The writer called him to his SME Marketing Klinic. He explained him the mistakes he made by ignoring marketing for such a long time. He advised to start marketing his business to other similar customers in the same category as his major customer was and also to other select industry segments. On the request of his CA, the writer also offered his professional assistance, in case he wants to do so professionally. He had this time no choice but agreed to take marketing as the final call as a rescue to come out of the business mess.
 
But, once again, typical attitude of SME owners surfaced. He started debating his current inability to make payment for marketing advisory and spending on marketing till the time he comes out of the financial crunch.
 
SME owner did not understand that it is marketing only that can help him to get new customers, more business, generate better cash flow and repay the dues and come out of payment crisis. Instead, he once again ignored marketing as the expense.
 
Soon after this the SME owner made a 10 day shopping trip to Dubai with his family. He ignored the priority and commitment for his business. Today after one year, he is not in a better position. The land rates he was relying on as the sure shot backup in difficult time, lost its premium price in the course of time, due to various reasons. Also, no buyer would like to buy already constructed factory shed as per the requirement of packaging industry. He still has not changed and shows no willingness to put marketing at work with a clear mindset that marketing is an expense and he has no money to spend.
 
It is said that the way SMEs used to do business till yesterday, if they continue doing so and ignore role of marketing in business, many of them will not see tomorrow.
 
In one word, all successful SME stories have one thing in common – they all believed in marketing and invested in marketing at the early stage of growth process. The writer endorses this fact after his marketing advisory experience with over 250 SMEs in India.
 
Marketing means different thing to different people? What it means to you?
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