Have Small Business Adopted the Market Orientation Concept - Term Paper Example

?Entrepreneurship Table of Contents A Introduction 3 Entrepreneurship - Definition 3 Example of entrepreneurship 4 2. Marketing Segmentation/Target Marketing 6 3. SME 8 B.1. Promotion Pricing 9 2. Distribution 9 C. Geographic: 10 Demographics: 10 Psychographics: 10 D. Business opportunities 10 1.1 Sales 11 1.2. Cost 11 1.3. Market share 11 1.4. Customer 11 C. Conclusion 12 Reference List 13 A.1. Introduction The entrepreneurship concept was propounded in the 1700s. At that time entrepreneurship meant only “starting of one’s own business” (Sobel, 2008). But many economists have proved that the usefulness of the term is not just limited to “starting of one’s business” (Sobel, 2008), it is more than that. From then the meaning has become more prominent and understandable to everyone. Entrepreneurs are the individuals who start business and operate their business and are fully accountable for the profit or loss in their business. For example if a person who intends to be a successful entrepreneur has to possess few important qualities. Success in business is ascertained by the innovation and the types of actions that are taken in the course of the business. To be a successful entrepreneur a person has to think about innovation. Innovation is needed because the market is becoming competitive and there exist a number of competitors. In order to stay one step ahead of the competitors entrepreneurs have to be innovative and have to take the right business concepts to deal with the business (Sobel, 2008). Entrepreneurship - Definition Stevenson has defined “Entrepreneurship” as the search for new opportunities with the resource constraint. Whenever an entrepreneur recognizes that there is a small window of opportunities they grab it and try to exploit the opportunity as far as possible. According to Peter Drucker, entrepreneur is defined as someone who searches for change, adopt that change and exploit those changes as an opportunity (Grebel, 2001). After introducing a business an entrepreneur should show progress in order to attract more resources so as to bring the business to a stable condition from where he/she can think of making the best business. The opportunities that the entrepreneurs seek may entail: embracing an innovative product constructing a new business model which can bring in success to the business creation of a more improved version of the existing product Target new set of customers with the existing products (Eisenmann, 2013). Example of entrepreneurship The example of entrepreneurship can be given through the basic steps that are followed to start a new venture. They are as follows: Creating a business plan: This is a very critical part of the process where an overview of the business should be made along with the industry background. It also includes the type of product/services the business is looking forward to launch and the business model they are going to use. The main focus is on the market segment they are going to address their products to. The trend of the market is also analysed in order to get the whole picture of the market. This is basically done to make sure that whether the trend will make profit for the business or will hurt the business. The start-up cost is also estimated in the business plan so that they do not face financial uncertainties and face loss. Choosing the Business approach: This is the testing stage for the previous step. The step tests whether the customers will buy what they have planned to sell. The best way to do so is to communicate with the potential customers and see their reaction about the product. The reactions in this initial stage indicate whether the company will be successful or not. Raising the capital for the business: This stage is a very critical stage for the entrepreneurs as they have to face the problems of raising capital for the business. Investors are reluctant to invest in the venture at first without checking whether the business is viable or not. Choosing the legal structure: If the investment is made by the investors or partners there is always a need to define an appropriate legal structure for the venture. The alternatives are sole proprietorship, corporation and partnership. Besides the legal structure the entrepreneur should also keep in mind the legal issues regarding the company name. Registration of the business name: The name of the company should be registered with the state government. Obtaining the business license and permits: This step is very important for a business. The business should obtain state, federal and local licenses. Understand the responsibility of the employer: Before hiring any employee for the business the employer who is also the entrepreneur must know the legal steps of hiring employees for the company (Taulli, 2009). Qualities Required For Becoming a Successful Entrepreneur Many young talents desire to become entrepreneurs. For young blood what matters to them is to be the master of their own. That is why this career path is attractive to many people. But it is to be noted that every entrepreneurs cannot be successful as they do not possess that entrepreneurial mindset (Timmons and Spinelli, 2003). To be a successful entrepreneur following qualities should be innate in the person: Self-motivated: Successful entrepreneurs do not require someone to hold them accountable for the business and even control them for the efficient working of the company. Creative: Copying others ideas and features are not a sign of a responsible entrepreneur. A successful entrepreneur should be creative in every proposal and idea he/she makes. The entrepreneurs can even take the old business models and then modify them in such a way that they can attract potential client or customers. Authoritative: It is important to communicate and build networks with others in the course of the business that may help in the business. But in the course of the business it can be seen that few people are scammer and manipulators. So in order to be a successful entrepreneur one should not get influenced by these negative forces they must be authoritative. They should take advice or opinions but the final decision should be theirs which will be taken for the betterment for the company (Riog, Riberio, and Cuervo, n.d.). Strong- will: Entrepreneurs start their journey with a dream of achieving a goal. In achieving that goal they might find many obstacles. A successful entrepreneur should always have the strong will to stand by their goals and fight back the problems (Laidre, 2002). 2. Marketing Segmentation/Target Marketing “Target Marketing is the only effective way to optimize marketing resources” (Blankson, 2005). This is true for entrepreneurs too. Before starting a business they should segment the market and target their prospective customers. By targeting markets, large numbers of customers can be reached by the entrepreneurs. The customers are reached by different promotion strategies. They can decide on price of the products after having knowing about the purchasing power of the target market. In the course of time when they are doing business in a particular market the business faces many hurdles. Entrepreneur Barbara Corcoran, real estate tycoon and Shark Tank expert has shared her feeling about the challenges she face even today. During one interview she realised that her challenge is not her competitors but her own insecurity. The insecurity is for hearing the words “you are stupid” has always chased her right back from her childhood. But she has never overcome this problem. Those words now drive her success and have made her a business tycoon. Thus it can be inferred that if entrepreneurs have some insecurities they should embrace that like a friend and those insecurities will make them run (Conner, 2013). Successful entrepreneurs can even face hurdles which can be from their competitors and from their personal problems. Thus an entrepreneur who is just stepping into business can face huge problems at the early stage of the venture. They are as follows: Huge competition: Small businesses find it difficult to survive in a competitive market with strong players. Thus they need to research the market more accurately and take decisions very carefully in order to survive in the market. The entrepreneurs have the responsibility to take care of these hurdles and thus must possess the ability to analyse the market and by their intelligence compete with the existing firms (Silverthorne, 2013). Procrastination – People have the bad habit of keeping things for tomorrow when it can be done today. This attitude of the entrepreneurs affects the business a lot. They keep works pending and later when the situation changes they do not find any answer to the problem. Procrastination can be overcome by shifting the attention from what is urgent to what is important. Time management: Time management is very important for a successful entrepreneur. Most of the entrepreneurs fail to organise their work according to the time. They are reluctant to keep their promise and thus the business gets affected. To overcome the situation the entrepreneurs should balance their works. New Challenges: Changes are taking place every day and it becomes a challenge for the entrepreneurs to rule in the changing environment. But challenges are to be seen as the best business partners and by doing this they can overcome it. Financial problem: Often entrepreneurs are confronted with fund crisis. Once the process is streamlined cash is required by the business. If the cash is not available at the right time then the business may face crash down (Nadeau, 2013). According to him, an entrepreneur should seek new opportunities for the development of the business. An entrepreneur exploits new market for strong customer base in order to give his/her business a good position in the market. According to Schumpeter, entrepreneurs are engaged in innovating new products so that they can differentiate their products from their competitor’s products and thus tap the new target markets (Nobel, 2013). 3. SME SMEs or Small Medium Enterprises are the companies which possess a limited number of personnel. SME aims at strengthening “the capacity for innovation” by developing on adopting new technologies and inventing new products or services which will meet the customer satisfaction of the target market. The SME’s help in outsourcing research and increasing their research efforts, extending the network of customers and also helps in bridging the gap between innovation and research. In Europe the SME’s have 250 employees and the turnover of the business does not exceed 50 million euro. The SMEs have to follow rules and regulations that are stipulated by the Government. They have to maintain their trade in such a way that it does not violate any rules. B.1. Promotion Pricing Promotion pricing also known as the penetration pricing is the cost for setting strategies in the consumer market. It basically involves in reducing the price of the product or services temporarily so as to attract the customers and thus develop loyalty for them to secure the future profit. This is the strategy which is used by the entrepreneurs to spread awareness about their product and services to the mass or the retailers. The idea of this pricing is to appeal the customers with low cost. Loyalty to the brand is the main goal for the companies as it means repeat business and thus it increases the profit of the company. 2. Distribution Distribution is the process by which the companies circulate its products to the customer. The aim of the distribution channel of a company is to make the products available to the customers at the right time and at the right place. Distribution is made through the distribution channels which include the distributors, retailers and wholesalers. They act as an intermediary between the company and the customers. The main function of these distribution channels are to communicate between the companies and customers. They even negotiate with the customers on behalf of the company. They are also responsible for communication of the offers to the customers. C. Geographic: This includes the location of customers, size of the area and lastly the climatic zone of the area where the customers belong to. Entrepreneurs should take into account the geographic factors before starting a business. It will help them to strategise their moves in launching the product. Demographics: This includes the gender, age, family size, income and education of the target customers. Entrepreneurs should also concentrate on the demographic features of an area they are targeting so as to know whether their product will be liked by the mass. Psychographics: This basically defines the behaviour and the personality of the customers. This reflects the life-style of the customers and also tells about their tastes and preferences. The entrepreneurs should have the knowledge about the tastes and preferences of the target market (Blankson, 2005). D. Business opportunities The new businesses always seek to find any opportunity by which they can expand their business and thus they remain quite alert in taking advantage of any situation that indicate a prosperous opportunity. 1.1 Sales Sales can only increase if there are good opportunities to penetrate in the market. If the product is not accepted by the mass then it have negative impact on sales and thus inventory increases. Thus new opportunities are required to increase the sales (Hritesh, 2012). 1.2. Cost The cost of the product is important as it is the main characteristics of the product that attracts the customers to buy it. If the cost of the product is high then the customers will not buy it and thus the product will suffer loss. 1.3. Market share The companies always aim at increasing its market share. Through different marketing strategies and new plans the companies aims at creating new market share. Every company whether small or large does the market research to know the market condition and the market share of the companies that are in the same domain. Accordingly they set their plan of penetrating the market (Hagedoorn, 2006). 1.4. Customer Customers are the main target for the business. It is important to know the customers and then place the products in the market. Since different customers have their own taste and preferences and even need, the companies have the urgent need to understand these needs and focus on them and then plan the products and their distribution. Often it is seen that the products are not customer need oriented and thus the companies face with loss as the sales decline (Bone, 2012). C. Conclusion Entrepreneurship has become a profitable business all over the world. To be successful in the business one will have to be innovative and take different actions in the course of the business. Not only innovation, the person should also think about improvement in order to sustain in long term. Innovation is needed because the market is becoming competitive and there exist a number of competitors. In order to stay one step ahead of the competitors entrepreneurs have to be innovative and have to take the right business concepts to deal with the business. Thus it can be concluded that the person with potential can only survive in between the successful entrepreneurs. To start a business the entrepreneurs should survey the market in regard to the taste and preference of a particular market and also about their rivals. Reference List Blankson, C., 2005. Have Small Business Adopted the Market Orientation Concept. [online] Available at: [Accessed 17 July 2013]. Bone, B., 2012. Importance of Entrepreneurship. [online] Available at: [Accessed 17 July 2013]. Conner, C., 2013. Overcoming the Biggest Challenge in Business. [online] Available at: [Accessed 17 July 2013]. Eisenmann, T., 2013. Entrepreneurship. [online] Available at: [Accessed 17 July 2013]. Grebel, T., 2001. An Evolutionary Approach to the Theory of Entrepreneurship. Hagedoorn, J., 2006. Innovation and Entrepreneurship: Schumpeter Revisited. [online] Available at: [Accessed 17 July 2013]. Hritesh, D., 2012. What is Entrepreneurship and its Importance and Features? [online] Available at: [Accessed 17 July 2013]. Laidre, A., 2002. Top 5 Characteristics of a Successful Entrepreneur. [online] Available at: [Accessed 17 July 2013]. Nadeau, C., 2013. The Small Business Entrepreneur’s Greatest Challenges. [online] Available at: < http://chrisnadeau.ca/2013/01/30/the-small-business-entrepreneurs-greatest-cha/> [Accessed 17 July 2013]. Nobel, C., 2013. Lean Strategies Just not for Start-ups. [online] Available at: [Accessed 17 July 2013]. Riog, S., Riberio, D. and Cuervo, A., n.d. Entrepreneurship: Concepts, Theory and Perspective. [online] Available at: [Accessed 17 July 2013]. Silverthorne, S., 2013. Breaking through a Growth Stall. [online] Available at :< http://hbswk.hbs.edu/item/7041.html> [Accessed 17 July 2013]. Sobel, R., 2008. Entrepreneurship. [online] Available at: [Accessed 17 July 2013]. Taulli, T., 2009. The Basics of Starting a Business. [online] Available at: [Accessed 17 July 2013]. Timmons, J. and Spinelli, S., 2003. New venture creation. New Delhi: McGraw-Hill. Read More