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Int. J. Entrepreneurial Venturing, Vol. 3, No. 2, 2011
The role of knowledge in entrepreneurial marketing
Roland Zs. Szabo*, Lilla Hortovanyi,
David F. Tarody, Adrienn Ferincz and
Miklos Dobak
Corvinus University of Budapest,
Fovam ter 8, H-1093, Budapest, Hungary
Fax: +36-1-482-5018
E-mail: [email protected]
E-mail: [email protected]
E-mail: [email protected]
E-mail: [email protected]
E-mail: [email protected]
*Corresponding author
Abstract: This paper aims to explain how the two sources of knowledge
(know-how, know-who) influence the use of innovative marketing techniques
and their impact on competitive advantage. The proposition is studied through
case-study methodology. Entrepreneurial behaviour is generally associated with
the ability to innovate, initiate change, and perpetuate the strengths of
flexibility and responsiveness. Consequently, entrepreneurial marketing
managers also search for creating new opportunities by coming up with new
combinations of the marketing tools, allocating resources in another way, or
just looking at the value creation process from a different point of view. While
conventional marketers use the traditional market research to adapt to the
environment, entrepreneurial marketers rather build on experience, immersion,
and intuition for making their decisions.
Keywords: entrepreneurial marketing; guerilla marketing; knowledge;
multi-case method; entrepreneurship; know-who; know-how.
Reference to this paper should be made as follows: Szabo, R.Zs.,
Hortovanyi, L., Tarody, D.F., Ferincz, A. and Dobak, M. (2011) ‘The role of
knowledge in entrepreneurial marketing’, Int. J. Entrepreneurial Venturing,
Vol. 3, No. 2, pp.149–167.
Biographical notes: Roland Zs. Szabo is an Assistant Professor at Corvinus
University of Budapest and a Research Fellow at the Strategic and International
Research Centre. He is the author and co-author of several research papers and
book chapters about strategy and entrepreneurship. He also works as a
Management Consultant for a variety of companies.
Lilla Hortovanyi is an Assistant Professor at Corvinus University of Budapest.
She holds an MSc in Business Administration and a PhD in Corporate
Entrepreneurship. She was the Administrative Chair of the 23rd RENT
International Conference organised in collaboration with the ECSB in
November 2009. Besides her academic work, she is the Territory Manager of
the Cisco Entrepreneur Institute in Hungary.
David Tarody is a Research Assistant at the Strategic and International
Research Centre. He is currently enrolled to the PhD programme of Business
Administration at Corvinus University. As a graduate student he has been
Copyright © 2011 Inderscience Enterprises Ltd.
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involved in several research projects, he was also the Winner of the Scientific
Student Conference’s Strategic Management Track in 2010 at Corvinus
University.
Adrienn Ferincz is a Research Assistant at the Strategic and International
Research Centre. She has been involved in the implementation of various
research projects since 2009. She also works for Cisco Entrepreneur Institute as
a Programme Manager.
Miklós Dobák is the Head of the Institute of Management at Corvinus
University Budapest. He has been the Director of the Department of
Management and Organisation since 1989. He has published several books and
articles in the field of management and organisation.
1
Introduction
In the past few years, conventional marketing practices have been criticised. Among
several other shortcomings, these criticisms questioned the over-reliance on established
rules-of-thumb, formula-based thinking, the strong emphasis on promoting the four
elements of the marketing mix, as well as the tendency to be imitative instead of
innovative in marketing strategies (Morris et al., 2002).
A solution to overcome these limitations might be the entrepreneurial approach to
marketing, which embraces an entrepreneurial mindset in order to allow for a more
sophisticated and efficient implementation of the marketing mix (Schulte and Eggers,
2010). Linking entrepreneurship with marketing leads us to the definition of Kraus et al.
(2010) who describe entrepreneurial marketing as “an organisational function and a set of
processes for creating, communicating and delivering value to customers and for
managing customer relationships in ways that benefit the organisation and its
stakeholders. According to their definition, entrepreneurial marketing is best understood
as “marketing activities with an entrepreneurial mindset” (p.20).
Knowledge is recognised as a crucial element of entrepreneurship (Mueller, 2005). It
generates innovations and is capitalised by being transformed into new products,
processes, and organisations. One of the misconceptions about the entrepreneurial
mindset is that entrepreneurs are the wanderers of the business world; they make
decisions based on pure intuition. By contrast, the ability to identify, assess and
commercially exploit business opportunities demands the existence of knowledge and
skills. The success of an entrepreneurial organisation lies in its willingness to accumulate
knowledge. One reason for different degrees of entrepreneurial activity across firms
might be due to the varying level of knowledge sources firms possess.
Wickham (2006) has suggested that there exist different sources of knowledge. Some
important sources of knowledge are product or service knowledge, market knowledge
and technical knowledge. It is the conjunction of all these three sources that sets up
industry-specific knowledge.
Industry-specific knowledge, however, does not produce entrepreneurs on its own. It
forms the basis of a competitive advantage only if it is supplemented with other sources
of knowledge, like general business and people knowledge. If an entrepreneur with such
knowledge were to be transplanted from one industry to another, the knowledge would
still be valuable (Szabό, 2010; Wickham, 2006).
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The framework developed in this paper aims to explain differences in entrepreneurial
marketing activities due to variations in organisational knowledge. In their attempt to
clarify the concept of entrepreneurial marketing, Kraus et al. (2010) called for empirical
research, namely field experiments, participative observational research or narrative
interviews, which all appear promising to conduct such exploratory research.
Consequently, the aim of this paper is accomplished by the qualitative study of
knowledge sources in four organisations from a single industry in order to support
propositions empirically in a more accurate way. Actors within a single industry are
confronted with the very same macroeconomic trends and industry forces.
2
Literature review
2.1 The link between entrepreneurial behavior and marketing
An innovation is more than an invention of doing something in a new way. Innovation
also includes an understanding of how a new product can be delivered to customers and
how it can be promoted to them. Accordingly, innovation is a means of opportunity
exploitation. Thus, organisational, financial and commercial activities are equally
present.
Entrepreneurial marketing has a relatively young literature, but it is constantly
growing. The concept has started to come into focus as the research in entrepreneurship
has highlighted important findings about marketing practices that also have improved the
existing marketing knowledge (Gartner, 1994; Morris et al., 2002; Hills et al., 2008;
Hansen and Eggers, 2010).
Hills and Hultman (2006) regard entrepreneurial marketing as an interface between
entrepreneurship and marketing, where the two disciplines share the same concepts,
objectives and goal-oriented behaviour (Gartner, 1994). Entrepreneurs are often
associated with generating change to destroy the economic equilibrium and through that
open up new opportunities for themselves and for their followers as well. Morris et al.
(2002) defined entrepreneurial marketing as the proactive identification and exploitation
of opportunities for acquiring and retaining profitable customers through innovative
approaches. In order to be able to perform innovatively in such a way, entrepreneurial
behaviour is necessary.
Entrepreneurial behaviour is generally associated with the ability to innovate, initiate
change, and perpetuate the strengths of flexibility and responsiveness (Guth and
Ginsberg, 1990). There are five generally accepted measures of entrepreneurship:
autonomy, innovation, proactiveness, calculated risk-taking, and growth-orientation
(Hortovanyi, 2009; Stevenson and Gumpert, 1985; Eggers, 2010). In addition, Timmons
(1994) suggested that entrepreneurial behaviour is opportunity-driven, where the
exploitation of the opportunity is led by a team with parsimonious resources. An
entrepreneurial marketer is also expected to demonstrate similar attributes (Martin,
2009): be opportunity-driven, be innovative and proactive in using resources, and, of
course, be reliant on social capital in exploiting opportunities.
The present study assumes that managers differ in their skills and competencies to
apply consciously marketing tools to the discovery, creation and exploitation of
opportunities. There have been several studies examining and emphasising the role of
innovative and creative solutions in marketing and communication techniques (Morris
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and Lewis, 1995; Gartner, 1994) in order to apply a more cost-efficient approach
compared to classical advertising. Entrepreneurial marketing may take several forms,
such as guerilla marketing, buzz marketing and viral marketing (Hill, 2009; Levinson,
1984) all standing for a variety of low-cost, high-impact marketing techniques that allow
entrepreneurial managers to achieve wide-ranging results with an untypically low
utilisation of resources (Rößl et al., 2009). Viral marketing can be achieved by the use of
social networks, while buzz marketing refers to the use of word-of-mouth communication
through media such as internet, e-mail, or cell phone networks (Schmengler and Kraus,
2010).
2.2 Knowledge sources
The Austrian economics school viewed entrepreneurial activity as rooted in an economic
system in which information is unevenly distributed across people (Shane, 2001) which
leads to the rise of market opportunities. It is the possession of idiosyncratic information
that leads to the existence and identification of entrepreneurial opportunities. Taking it
one step further, the present paper proposes that entrepreneurial opportunities arise due to
variations in the knowledge sources of organisations.
In the case of small- and medium-size organisations, the success of a company is
often largely dependent on the owner-manager (Hambrick and Mason, 1984). Barker and
Mueller (2002) argue that managerial style and decision-making processes are influenced
by the knowledge of the individual, which is built up from that individual’s earlier
experiences and educational background.
This view is similar to Johnson and Lundvall’s (2001) model that distinguishes four
aspects of knowledge: know-what (knowledge about facts); know-why (knowledge about
principles); know-how (consisting of the practical capability to execute specific
activities); and know-who (who knows what and who knows what to do). These
knowledge sources are grouped in such a way as to argue that managerial behaviour
differs because of the difference in managers’ knowledge-base.
Figure 1
Main knowledge sources
Know-what – professional knowledge
Know-who – people knowledge
Know-how – managerial knowledge
2.2.1 Know-what
Szabó (2010) argues that value creation requires the possession of both product and
market knowledge, since the organisation must know the needs of customers and
how to promote and deliver the offerings to the marketplace. The industry-specific
knowledge, called know-what, however, is regarded as a threshold competence,
especially in repeated-purchase industries, where customer satisfaction and loyalty are
key to long-term success. In such industries, organisations simply cannot afford to lose
customers due to dissatisfaction; i.e., by not providing adequate solutions to their
problems. Customer loyalty secures the fixed income and the long-term existence of the
firm. Consequently, those ventures which do not possess know-what knowledge is
assumed to run out of business in the short-run.
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2.2.2 Know-who
Second, the relevance of external communication and the establishment of links with
outside organisations have been widely noted for entrepreneurship. Byers et al. (1997)
pointed out that entrepreneurship is embedded in a social context. The knowledge of
local, direct and interpersonal contacts enables businesses to identify where to access the
needed resources. In addition, the mobilisation of these resources is faster and more
successful than otherwise. According to Harryson (2006) the interpersonal or
interorganisational networks are the media through which actors gain access to a variety
of resources held by other actors (Hoang and Antoncic, 2003). These networks allow the
actor to increase knowledge creation and enhance innovation performance whilst
reducing complexity.
Tsui and Farh (1997), in their explanation of guanxi, which is the Chinese equivalent
of know-who, also arrived at a similar conclusion: managers end up in a position of
managing a whole series of interdependencies on customers, suppliers, bankers,
accountants, regulators and staff, among others, in order to survive and grow.
2.2.3 Know-how
The third source of knowledge which a firm can draw upon to develop a basis for
competitive advantage is knowledge of general management; that is the know-how.
Creating something new, improved, or competitive is not a straightforward task.
Know-how refers to the special knowledge about doing things. This is the knowledge
which enables a business to keep on track while focusing on opportunities at hand. An
opportunity is exploited only when its commercial value is recognised, hence the constant
reorganisation and recombination of resources in a more effective way; the organisation
becomes more responsive to the needs of customers and so becomes quicker in offering
them new solutions.
Peterson and Berger (1971) argue that entrepreneurial firms are often found in hostile
and dynamic environments. Miller (1982) also found that the more hostile, dynamic or
heterogeneous the environment the higher the level of innovation. Katila and Shane
(2005) also arrived at a similar conclusion when they found that low-competition,
resource-rich, and high-demand environments tend to support only incremental
innovations. Innovation capacity is rather greater in markets that are crowded,
resource-poor, and small. This is so because when resources constitute a bottleneck in the
course of opportunity exploitation of innovation is a must.
Consequently, Hills and Hultman (2006) argue that entrepreneurial marketing
managers also search for creating new opportunities by coming up with new
combinations of the marketing tools, allocating resources in another way or just looking
at the value creation process from a different point of view. While conventional
marketers use the traditional market research to adapt to the environment, entrepreneurial
marketers rather build on acquisition of new knowledge in form of know-who and
know-how.
2.3 Small business marketing
Innovation has a link to marketing behaviour through the formation and maintenance of
material competitive differentiation (Morris and Lewis, 1995). Marketing’s role in
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innovation then is to provide the concepts, tools and infrastructure to close the gap
between innovation and market positioning to achieve sustainable competitive
advantages (Gartner, 1994). It is important to note, though, that innovation doesn’t only
mean the development of new products or techniques but several aspect of marketing as
well (Cummins et al., 2000).
Such innovations are based on the need to adapt to the environment and keep or
improve the position of the company in the given market, through combating competing
products or engaging new customers (Simpson and Taylor, 2000).
Earlier it has been argued that small and medium enterprises differ from large
companies regarding their marketing strategies and tactics. SMEs must rely on their
knowledge of specialised, relatively narrow product niches in order to succeed (Kraus et
al., 2007). Researchers point out that the differences in their characteristics are derived
from the fact that SMEs are not able to hire experts hence their qualifications are
deficient (Moore et al., 1983; Gaedeke and Tootelian, 1980). This would suggest that
SMEs have fewer opportunities than large companies; however, Hill (2001) says that
they are able to generate competitive advantage because of their size.
The marketing activity of small firms is inevitably restricted in its scope and activity
because of their limited resources. This result in marketing that is simplistic, haphazard,
often responsive and reactive to competitor activity (Carson and Cromie, 1989). Coupled
with a dynamic environment, these limitations challenge SMEs, driving their need for
efficient and effective innovation to capitalise on marketplace opportunities; innovative
marketing provides a significant mechanism in this process (O’Dwyer et al., 2009).
2.4 Guerilla marketing
Kraus et al. (2010) describe guerilla marketing as an attempt to achieve high-impact
promotions with low utilisation of resources by acting like a guerilla. It means to be
surprising, efficient and rebellious. It also tends to be simple. Guerilla marketing actions
are often only one-time, limited in scope, and seldom repeatable (Campbell, 1985). The
low need for resources makes guerilla marketing attractive to small and new ventures
(Gruber, 2004). Small firms usually lack resources, and their marketing budget also tends
to be rather limited; hence they are under pressure to offset these limitations by creative
and unconventional solutions.
Concluding from the abovementioned characteristics, guerilla marketing tactics are
unexpected and unconventional and often call traditional marketing actions into question
(Hill, 2009). However, this type of marketing also requires an awareness of the traditional
marketing tools and a readiness to apply new ones, which can be combined in order to
eventually form the most adequate marketing portfolio for the company. According to
Levinson (1984), two things are necessary to execute the methods of guerilla marketing
successfully: a quality product and some money. The former is definitely needed in order
to provide value to customers. Without customers knowing about your product, however,
it is very difficult to sell. Guerilla marketing is a relatively economical way to persuade
potential customers to try or buy a product.
Resource scarcity alone, however, cannot explain the growing use of guerilla
marketing, especially in cases of medium and large firms. There are a number of
examples from large firms that leverage entrepreneurial marketing in order to gain
competitive advantage (see e.g., Miles and Darroch, 2006).
The role of knowledge in entrepreneurial marketing
3
155
Methodology
The aim of the present paper is to explain how the two dimensions of knowledge
(know-how, know-who) influence the use of innovative marketing techniques as well as
their perceived impact on a firm’s performance related to competition. In order to extend
our understanding of entrepreneurial marketing, as well as to verify our assumptions
about the difference in know-how and know-who of marketers, the case study method is
used to reveal grounded theory. Present research is built on a multiple case design. Each
case was carefully selected in order to predict constraining results for predictable reasons
(Yin, 1994).
3.1 Practice-based research
Maritz (2010) has attempted to integrate the theory with practice by incorporating the
models of Morris et al. (2002) and Strokes (2000) with 15 practice-based initiatives and
interpreted as practice theory. Based on their findings, 15 prominent marketing initiatives
were identified that are used by entrepreneurs to enhance organisational growth, boost
income and extend their reach of target markets. These initiatives embrace using online
marketing activity and tools, knowing and dealing with the customers, thinking in an
integrative way and being creative and flexible.
Among the latest examinations, Kaya et al. (2010) conducted research focusing on
musicians as entrepreneurs. Musicians live in a chaotic, turbulent environment; their
work requires action and initiative (Pendergast, 2004). Investigating which musician
discovers and exploits different types of opportunities in the emerging digital landscape,
Kaya et al. (2010) categorised musicians in four groups according to their business
orientation and the level of their experience and attitude towards online activity.
As result of their research, they identified four types of musician entrepreneurs and
the major differences in the way that musicians assess the role of music labels, usage of
technology, fame, targeted audiences and fan engagement. They also elaborated a theory
to better understand how musicians recognise and exploit entrepreneurial opportunities
provided by social networks.
3.2 Sample and data collection
As an initial testing of the know-how, know-who model, four SMEs are chosen (Table 1).
Each firm in the sample is a professional dental firm that has been in business for at least
five years, is managed by one or more owner-managers, and is wholly owned by
Hungarians. The industry and location were carefully selected: each and every firm is
located in the North Western region of the country, located in the same town, and hence
assumed to have – in theory – an equal chance to reach the same market share. In fact,
Hungarian dental services are very popular to a growing number of Western Europeans,
especially from neighbouring countries. This is an important characteristic, since
managers can decide whether they will stick to the local market or expand their market
share by serving foreign customers. In addition, healthcare is argued to be a
knowledge-intensive industry, which allows in-depth study of the different knowledge
factors.
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Table 1
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The summary of selected cases
The role of knowledge in entrepreneurial marketing
157
The know-what factor – as mentioned earlier – is a must-have competence for healthcare
professionals, hence each firm posses it. Firms are differentiated according to their
competence of know-how and know-who skills.
Theoretical sampling is employed; the cases were chosen to provide examples of
polar types (Eisenhardt, 1989). The selected cases were required to possess, as clearly as
possible, the characteristics of each category in the tested model. Selection of the
companies for these case studies was based on the entrepreneurial competencies
(know-how and know-who) of the organisations and our prior knowledge of these firms.
The data collection in this study relied on face-to-face interviews with the business
owners of the dental firms, direct observations of the organisations during the visitations
(Yin, 1994) and examination of the homepage and other marketing tools of the firms. The
interviews were conducted based on open questions about the industry, organisational
characteristics, marketing activity, marketing tools employed, innovation in the
organisation and the results of the operation.
4
The emergent cases
4.1 Case 1: the family business
To test the segment with low knowledge of management and marketing, the authors
arranged an interview with a small enterprise of low growth opportunity and weak
marketing activity. The main resource of this organisation is the up-to-date professional
knowledge (know-what). The owner of the enterprise is a specialist in dentistry: he
perceives himself not as a manager-leader, but solely as a doctor. He doesn’t have
advanced management skills or marketing knowledge and experiences. Consequently, he
also disapproves the ‘business-approach’: His duty is not running the business, or
monitoring the market trends and competition: “I’m a dentist, not a merchant. My job is
to cure people and not to sell them products”.
As the owner admitted, the venture is a small family business. The core
organisational values are the long-term approach, quality, and trust. The building, which
is also the home of the owner’s family, enhances this familiar atmosphere. The owner
hasn’t got any growth objectives; the only intention is to develop the standard of the
service. The long-term targets of this business are all personal: making a good living and
having more free time. “We do not want to grow! We are satisfied with our current
situation and that is enough for us”. The continuous upgrade of professional knowledge
is core concern; however, it is basically expected threshold competence for the industry.
“Our most important target is to maintain service standards, because it is necessary to
remain competitive. The development of the industry is fast”.
With regards of entrepreneurial orientation, the owner is rather a follower. He does
not search for new growth opportunities; he is contended with consolidating the venture’s
current position. Consequently, the venture has only a weak marketing activity: only a
flyer is sent twice a year to existing customers. “We have a homepage, because
everybody has one”. There aren’t any conscious ways to renew the consumer base, only
the indirect method of word-of-mouth marketing. “I don’t think that marketing can be
really effective. My way is to offer/sell a service delivering good quality. Due to this my
patients recommend me and my services to their neighbours and friends. This is enough
for me!”
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As for the strengths, the venture focuses on providing high-quality of service. Its
connections to the market are weak; the company is focusing only on its existing
consumer group. It can’t react to the changes and challenges of the market because of its
weak and tight customer base, and it is incapable of performing radical changes and
implementing innovations because lack of advanced management skills and the lack of
knowledge of new opportunities all together keep the business in highly vulnerable
position.
4.2 Case 2: the expert
Partial awareness of marketing opportunities is the main characteristic of the expert
enterprise, which possesses satisfactory management skills but inadequate marketing
activity. This consciousness appears in the positioning and the development of the
service, but this development is incremental and absolutely misses innovation and the
search for new opportunities, so there is a lack of entrepreneurial approach.
The company plays only a small role in the premium segment of the market. The
overall target is to fit the demands of the premium consumers. The conscious, but slow,
expansion of the capacity is not the base of the company’s growth; it is only a part of the
company’s intention. “I have a dentist’s surgery, not a grocery. What you choose – for
example in the case of an implantation – that will become a part of your body for a
lifetime. So, there is only one solution, and this one is the only good solution!” The core
values of the organisation are providing a high standard of living and more free time for
the owner, but in this case, the owner also aims at high self-achievement by being an
expert in dentistry.
The expertise and the premium quality is the base of the business model. The aim of
this model is to ensure highly qualified services with the most modern technology. The
quality orientation is noticeable in the firm’s environment and atmosphere.
As mentioned earlier, this conscious positioning supposes certain management
knowledge and incremental planning but misses any proactivity, such as seeking for new
opportunities and market gaps, monitoring the consumer’s demand and the competitors’
activities. The main target is to secure the status quo and the organisation’s position in the
market. “We haven’t got any objectives. We have already achieved our aims. We have a
good life with more-and-more free time, but we believe that no one can be good enough
for his job. Developing specialised knowledge is very important for me and it is a
fundamental for the business, too”.
The company doesn’t use any marketing tools constantly and consistently. There is a
lack of consciousness in the marketing activity. No planning and no monitoring, hence
the use of marketing tools is rather random. This is no surprise, since the owner’s aim is
to secure the company’s market position, rather than to look for new market niches. “We
have a website and we spend a certain amount of money on online marketing every
month. I know it’s important that we also present the company online, but I’m not
interested in looking for new clients”. Such marketing initiatives are fully inefficient,
because the missing organisational objectives and motivating factors ends up in over
spending. “The present situation and the future prospects are satisfactory for me”.
This second case has more similarities with the family business than differences from
it. This firm’s significant advantages are higher benefits and larger capacity, but both the
family business and the expert have to deal with the same weaknesses and threats. The
expert kind of organisation is isolated too, therefore it is also vulnerable.
The role of knowledge in entrepreneurial marketing
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4.3 Case 3: the marketer
The absence of the awareness and intuitive decision-making is also a characteristic of the
third segment. The firm’s primary target is to attain as many people as possible, but the
only tool to reach new customers is the attractiveness of low-priced service. The focal
point of growth is the enhancement of the quantity and capacity.
The target customers are not only locals, but prospective clients from
Western-Europe. Those, who can’t afford the service of their local dentists. During the
interview, it was the first time that the word bargain appeared. So, the base of the
marketer’s competitive advantage is the difference between the Hungarian and Western
European prices. “The technological costs are here the same as everywhere in Europe,
because we use Swedish and German materials and tools. The doctors’ and the surgeons’
costs are one third of the foreign prices”.
The most important advantage of the marketer in contrast to the family business and
the expert is the capability of attaining foreign markets successfully. In order to achieve
it, the venture operates with a well-functioning marketing activity. “Our target countries
are England, Germany and Austria”. The service portfolio is diversified; the core activity
is complemented with related services such as a beauty salon and airport transfer.
It is clear that the marketer can afford a higher standard of service than the family
business or the expert, but these new elements are only imitations, not innovations. These
phenomena exist due to the scarcity of the entrepreneurial approach and the advanced
management skills. The owner-manager is aware of the role of marketing tools. Based on
his insight, he designed a service package which elements are put together rather
randomly. This is a threat: the company can reach a broad consumer base with the
extended marketing activity; they can lure the clients to Hungary but can’t cope with the
most serious risk factor of the low-cost clinics, which is the dropout.
The dropout is a general phenomenon, there is a chance that the patient will change
his or her mind once arriving at the dentistry and decides to buy service from another
clinic. Consequently, price-based competition leads also to a vulnerable market position.
Because of lacking innovative, self-developed ideas and initiatives which would
prevent high drop-out rate, the venture needs to compensate with extensive marketing
activities. The low margin together with the low conversion rate also means that
marketing expenditures are high leaving less for the organisation to spend on innovative
ideas. “We invest in innovations if it’s really necessary”. The way to cope with these
challenges is to develop the management skills to make the decision-making conscious
instead of intuitive, which could lead to a more effective operation.
4.4 Case 4: entrepreneurial marketer
The following parameters are the main characteristics of the last analysed organisation:
reactivity, constant flow of innovations, seeking for new opportunities, aggressive growth
targets, and powerful branding. The core values of the firm are the premium service, the
focus on innovation, the entrepreneurial approach on all levels of the organisation.
As for the employees, their number is high, they are loyal, their working environment
is luxurious, and everybody has the freedom to introduce their own ideas to develop or
change something. “The waiting room is beautiful, as you could see it. But our office,
lunch room and storage room are also beautiful!” The only rule is that the performance
of the individual or that of the organisation must increase. If a technological novelty
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becomes affordable on the market, and it hasn’t got any medical risk, it will be integrated
as soon as possible.
These bottom-up initiatives are the main resources of the firm and they make the
flexibility and the ability to react quickly and proactively possible. The firm uses every
possible information sources and continuously and intentionally monitors industry trends
and competition. “If I hear something, for example in the bus stop, I can present it at the
weekly meeting. If the others reckon it interesting, I get the chance to work out the idea”.
Dental tourism is a good example of the firm’s proactivity. The expression ‘dental
tourism’ became the keyword of the company’s communication very early, in 2006. The
media started to use it in 2007. Thanks to such a foresight, the company became very
early a reference in the industry.
The constant state-of-the-art technology serves the aims of the differentiation. “We
bought a new diagnostic instrument. There are 2 or 3 of these in the country now. You
can check it on our website!” The service portfolio is more developed too; the firm offers
a well-organised service package, a so called ‘dental week’, which includes travel tickets,
accommodation in the own hotel-clinic, free-time activities, dental and beauty treatments.
This conscious product planning results in high commitment by the clients and eliminates
the marketer’s main risk factor, the high dropout rate.
The targets of this marketing are most Western European countries; furthermore, the
company uses all existing online and offline channels to reach the target audience. So it
can be concluded that marketing is a fundamental element of the business model. The
company focuses only on new customers; there are not many repeat customers. “A new
tooth is perfect for 20–25 years. Why should the client come back from England?”
To summarise, the innovative approach along with the opportunity-seeking, advanced
management skills and aggressive expansion targets result in a flexible, proactive, and
fast-growing organisation. Thanks to these features, the company is able to influence the
industry trends and can create new standards. The management and the marketing skills
together lead to the firm’s current market-leader position.
5
Discussion of emergent cases
5.1 Theory development
The case studies were carefully analysed in order to deepen our understanding of
entrepreneurial behaviour of founder-managers in SMEs with regard to using guerilla
marketing techniques. One aim of the research was to highlight the role of know-how,
which was examined through the awareness of the operation and the ability to manage
complex processes. The second aim of the research was to contribute to the development
of the know-who concept, which was captured through attitude toward marketing and the
marketing activity of the firm.
As the findings of the qualitative research indicate, there is heterogeneity between the
cases in their knowledge stocks. The results are summarised in a 2 × 2 matrix (Figure 2)
in which authors identified four different types of the small ventures based on their
know-how and know-who awareness. Each category varies from the others in at least the
degree (low/high) of one factor (know-how/know-who). The elements of the matrix are
the following: Family Business (low know-how and know-who), Expert (high know-how,
low know-who), marketer (low know-how, high know-who) and the entrepreneurial
The role of knowledge in entrepreneurial marketing
161
marketer (high know-how and know-who). The cases also suggest that the model is
dynamic in nature. It is feasible to change behaviour and move from one category to
another, however, the movements are rather restrictive in nature.
Figure 2
Degree of know-how and know-who in SMEs
HIGH
Expert
Entrepreneurial
marketer
Family business
Marketer
KNOW-HOW
(Management skills)
LOW
LOW
HIGH
KNOW-WHO (Marketing skills)
5.2 Develop know-who skills
The family business is vulnerable, relying on its current customers. It doesn’t make any
effort to observe the market or its customers; therefore it is not able to react to changes. It
has two ways to alter its position in the model. One way is moving up to the expert
category through service development. However, it is not the proposed way because the
firm will remain isolated unless it is ready to invest into know-who skills. The
recommended way, is to move in the direction of the marketer through development of
marketing and the organisational knowledge of the market, the customers and their needs.
From the firm’s side it will demand most of the changes in the marketing approach, the
attitude to marketing. At this point the movement in any directions demands the
improvement of managerial and marketing knowledge of small and medium enterprises.
Firms with low know-who skills can be described as the following:
•
there is lack of an entrepreneurial way of thinking and lack of novel, innovative
marketing
•
they aren’t able to change and they mostly don’t realise the need to do so
•
they are dependent on their current customer base, hence they are vulnerable.
5.3 Develop know-how skills
The marketer carries the germ of entrepreneurship, which is manifested mostly in its
marketing activity. A marketer organisation lacks awareness of the expert, because it
hasn’t got enough management knowledge and skills. It focuses on reaching the mass
market and attaining as many customers as possible with no frills services. The marketer
invests huge amounts of money in marketing, and as a result it doesn’t have much to
spend on innovations. However, it has more growth opportunities than the family
business or the expert. These opportunities fall behind the entrepreneurial marketer’s
162
R.Zs. Szabo et al.
because the marketer has not enough knowledge to manage these processes. With
managerial knowledge, the marketer could become an entrepreneurial marketer and could
manage the risk better and improve the efficiency of its activities.
Firms with low know-how skills can be described as the following:
•
they aren’t able to manage complex processes, and they lack awareness and bigger
developments
•
they need to improve their management knowledge
•
they need to invest in knowledge and developments in order to reach the upper
categories of the model (see arrows in Figures 3 and 4).
Figure 3
Movement through changing the attitude to marketing
HIGH
Expert
Entrepreneurial
marketer
Family business
Marketer
KNOW-HOW
LOW
LOW
HIGH
KNOW-WHO
Figure 4
Movement through improving the management skills
HIGH
Expert
Entrepreneurial
marketer
Family Business
Marketer
KNOW-HOW
LOW
LOW
KNOW-WHO
HIGH
5.4 The characteristics of the entrepreneurial marketer
The entrepreneurial marketer is the real entrepreneur. The entrepreneurial marketer
observes the market, customers, rivals, and collects information about its environment
steadily. The entrepreneurial marketer is proactive, looks continuously for latent needs,
and opportunities, focuses on innovation at an organisational level and aims on growth.
The entrepreneurial marketer is willing to take a risk if it is manageable and employs
creative, novel, proactive marketing techniques in an entrepreneurial approach and in an
effective way. The entrepreneurial marketer is successful and has enough resources to
maintain the firm’s position.
The role of knowledge in entrepreneurial marketing
163
The entrepreneurial marketer is more conscious and manages processes better than
the marketer, so firm activities are more successful and effective. In addition, the
entrepreneurial marketer is more creative, can market better its professional knowledge
and is able to manage more complex processes than the expert. The entrepreneurial
marketer is able to adapt to changes and has growth opportunities, unlike the expert.
An SME needs to have an entrepreneurial way of thinking in both, operation and
marketing in order to be successful in the long run. There is a correlation between the
degree of know-how and know-who, and the level of consciousness in the firm and the
success of marketing activity are in a close connection with each other. Consequently, it
is important to develop both the managerial skills and marketing knowledge.
The know-how and know-who model draws attention to the importance of knowledge
in being a successful entrepreneur and a marketer at the same time. An additional finding
was the importance of the use of marketing tools in practice. The entrepreneurial
Marketer’s creative initiative to reach the target market effectively is in line with the
findings of Maritz (2010). Findings also underline that some of the online marketing
tools, like search engine marketing, social network marketing, paying attention to the
customers, improving the service standard by listening to feedback are key factors in the
dental service industry. The tracking of the customers, following with attention and
continuous contact with them has to be the base of a dental firm’s business model.
The following marketing initiatives and tools of Maritz (2010) were identified in the
case of the entrepreneurial marketer:
•
Improving sales by listening to feedback.
•
Generating sales using an online newsletter. The communication and promotion
through e-mail is one of the most important channels of the entrepreneurial marketer.
•
Using big online search options. This is one of the two bases of the entrepreneurial
marketer’s business models. The search engine marketing and the related tools are
the most important marketing channels to reach the foreign markets.
•
Targeting online customers. The target audience is the segment of 30- to 40-year-old
women with an average income from the UK, Ireland, France, and the Netherlands.
They are most easily accessible with online tools.
•
Turning customers into raving fans. A widely used method to reach new customers
is the free-of-charge annual check-up. Another way is offering free of charge travel
and other services for those who brings a new patient to the clinic.
•
Refreshing your brand. The brand’s constant repositioning is indispensable, because
the customer’s needs and trends change quickly in the dental, healthcare and beauty
industries. The current keyword is the aesthetic instead of the dental treatment or
implantology.
•
Implementing best practice from other industries. Dental tourism is a convergent
industry; it integrates elements of healthcare, dental and travel industries.
•
Targeted advertising and integrated marketing communications. Compared to
‘conventional’ tools of marketing, entrepreneurial marketing activities seem to be
more effective especially for targeting tailored services.
164
R.Zs. Szabo et al.
•
On the value of local knowledge. The entrepreneurial marketers have their own
dentists in every target country. Their tasks are making highly reliable pre-diagnoses
for the prospective clients as well as to provide follow-up services to customers.
•
Network, network, and network. For both information gathering about market
demand as well as to distribute information to the market.
In addition, the case studies highlighted that not only the modern tools can be successful.
The excessive use of modern marketing tools can do harm to the overall efficiency of the
organisation’s marketing activity. The aim is to maximise the portfolio’s effectiveness,
not the individual use of the tools. The entrepreneurial marketer uses a balanced
marketing toolbar, which contains both modern and conventional methods, such as
greeting cards, PR-articles and advertisements in healthcare magazines.
6
Conclusions and Implications
In this paper the authors introduced a widely applicable model for both researchers and
business professionals:
•
the case studies highlight the different effects of know-how and know-who on the
use of entrepreneurial marketing tools and techniques
•
the four identified SME categories in the model provide an explanation of the
connection between marketing activity and level of management knowledge factors
•
the model draws attention to the role of knowledge factors for market development.
An important conclusion of the research is that the fully intuitive decision-making and
the technological knowledge in itself are not sufficient for achieving long-term success.
The keyword is awareness, because the opportunities of the organisation may remain
hidden because of wrong goal-setting, which arises from the scarcity of advanced
management skills and an obsolete marketing approach. To summarise, the manager of
an SME is strongly recommended to invest in knowledge, in the development of
managerial and marketing knowledge and skills.
For policymakers, the research underlines the increasing role of SME education.
Since SMEs play an important economic role by contributing to employment, GDP, and
exports, as well as being a great source of innovation. It cannot be overemphasised that
conscious management practices need to be developed in founders and managers, in
order to balance professional knowledge with the effective use of entrepreneurial
behaviour.
The model, however, needs to be tested on a large sample with advanced statistical
methodologies. It can be also envisioned that different industries may have different
knowledge-demand; hence a comparison of industries may add key insights to the model.
Acknowledgements
The authors hereby would like to express their gratitude to the Hungarian National
Scientific Research Fund as well as to Budapest Economic Research and Development
Foundation for supporting the research project.
The role of knowledge in entrepreneurial marketing
165
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