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Innovative marketing in SMEs: an empirical study


Michele O'Dwyer a; Audrey Gilmore b; David Carson b
a
Department of Management and Marketing, Kemmy Business School, University of Limerick,
Limerick, Ireland b Department of Marketing, Entrepreneurship and Strategy, University of Ulster,
Jordanstown, County Antrim, Northern Ireland

To cite this Article O'Dwyer, Michele, Gilmore, Audrey and Carson, David'Innovative marketing in SMEs: an empirical
study', Journal of Strategic Marketing, 17: 5, 383 — 396
To link to this Article: DOI: 10.1080/09652540903216221
URL: http://dx.doi.org/10.1080/09652540903216221

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Journal of Strategic Marketing
Vol. 17, No. 5, October 2009, 383–396

Innovative marketing in SMEs: an empirical study


Michele O’Dwyera*, Audrey Gilmoreb and David Carsonb
a
Department of Management and Marketing, Kemmy Business School, University of Limerick,
Limerick, Ireland; bDepartment of Marketing, Entrepreneurship and Strategy,
University of Ulster, Jordanstown, County Antrim, Northern Ireland
(Received July 2008; final version received March 2009)

This paper considers the nature of innovative marketing in the context of SMEs (small
to medium sized enterprises). Research was carried out to identify SME decision-
makers’ perspectives on innovative marketing and to compare these with the nature of
innovative marketing practices actually carried out by the SMEs. An interpretivist
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methodology was adopted for this research using convergent interviewing and
observation techniques to help build up a picture of SME owner/managers’ perceptions
in relation to innovative marketing and to develop an understanding of the nature and
scope of their marketing in practice. Eight case SMEs were selected in accordance with
a pre-determined set of criteria enabling a purposive selection of case companies which
were ‘rich’ in information in the selected research area. The empirical findings
demonstrated that innovative marketing pervades much of SME owner/managers’
thinking and marketing activity with particular reference to the competitive market
circumstances within which they operate.
Keywords: innovative marketing; SME marketing; innovation; marketing activities

Introduction
The marketing function in SMEs is hindered by constraints such as poor cash flow, lack of
marketing expertise, business size, tactical customer-related problems and strategic
customer-related problems (Carson, 1985; Chaston, 1998; Doole, Grimes, & Demack,
2006; Weinrauch, Mann, Robinson, & Pharr, 1991). Yet, despite such restrictions, SMEs
successfully use marketing to generate sales (Guersen, 1997; Romano & Ratnatunga,
1995), utilising innovative marketing practices to overcome such challenges. This study
explores innovative marketing in SMEs by seeking to identify and clarify the nature of
such activities and practices.
Innovative marketing is fundamentally important for SMEs. Micro and SMEs are
major providers of new jobs (Audretsch, Verheul, Wennekers, & Thurik, 2002),
providing approximately 75 million jobs, and representing 99% of the 23 million
enterprises in the EU (Nyman, Berck, & Worsdorfer, 2006), therefore increasing
understanding of the key determinants of their success is essential. Research illustrates
that SMEs in pursuit of organisational goals do not adopt the marketing concept to
the same extent as larger firms (Bell & Emory, 1971; Brooksbank, Kirby, Taylor, &
Jones-Evans, 1999; Liu, 1995; Meziou, 1991; Pollard & Jemicz, 2006), and that
marketing practice in SMEs is situation specific, and variable in terms of

*Corresponding author. Email: michele.odwyer@ul.ie

ISSN 0965-254X print/ISSN 1466-4488 online


q 2009 Taylor & Francis
DOI: 10.1080/09652540903216221
http://www.informaworld.com
384 M. O’Dwyer et al.

sophistication and effectiveness (Brooksbank, Kirby, & Wright, 1992; Gilmore &
Carson, 1999; Hogarth-Scott, Watson, & Wilson, 1996).
Research was designed to identify SME decision-makers’ perspectives on innovative
marketing and to examine the nature of innovative marketing practices in SMEs. For the
purposes of this research, the definition of innovative marketing adopted is that posited by
Kleindl, Mowen and Chakraborty (1996, p. 214) as: ‘doing something new with ideas,
products, service, or technology and refining these ideas to a market opportunity to meet
the market demand in a new way’. However, it should be noted that the terminology
adopted for this empirical research differs from that given by the body of literature, in that
this research utilises the term innovative marketing rather than marketing innovation. This
differentiates innovative marketing from the marketing of innovation, thereby attaining
greater clarity.

Literature foundations of innovative marketing


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A review of literature highlights the linkage between innovation in SMEs and


creativity, new product or service development, new approaches to marketing issues
(Knight, Omura, Hills, & Muzyka, 1995), competitive advantage (Kandampully, 2002;
Martin & Rana, 2001; Stokes, 2000) and opportunity (Hulbert & Brown, 1998; Nonaka
& Takeuchi, 1995; Raymond, Bergeron, & Rivard, 1998). Furthermore, continuous
innovation in markets, products or processes in anticipation of, and response to,
dynamic customer requirements, competitors and supply analysis is the essence of SME
growth and survival (Chesbrough, 2003; Herbig, Golden, & Dunphy, 1994; Johne,
1999; Martins & Terblanche, 2003; McEvily, Eisenhardt, & Prescott, 2004; Mosey,
Clare, & Woodcock, 2002; Mostafa, 2005; Nieto, 2004; Prahalad & Ramaswamy,
2003; Salavou, 2004; Senge & Carstedt, 2001; Sexton & Arbaugh, 1992). Such
innovation stems from the flexibility and willingness of small firms to try new
approaches (Stokes, 1998), seize opportunity (Hulbert & Brown, 1998) and competitive
advantage (Knight et al., 1995).
Evaluation of the innovative marketing literature reveals that its primary components
include product enhancement, alternative channels and methods of product distribution
(Carson, Gilmore, Cummins, O’Donnell, & Grant, 1998), an exploration of new markets,
an alteration of the marketing mix and new operational systems (Stokes, 1995).
In reviewing these elements Cummins, Gilmore, Carson and O’Donnell (2000) surmise
that, although innovation can include new-product development, it contains more than
that, therefore incorporating innovative developments in other aspects of marketing. More
generally, the characteristics of innovation within enterprises have been identified as
searches for: ‘creative, novel or unusual solutions to problems and needs. This includes the
development of new products and services, and new processes for performing
organisational functions’ (Knight et al., 1995, p. 4).
Based on prior research, it is argued that innovative marketing is made up of (at least)
six elements: marketing variables; modification; customer focus; integrated marketing;
market focus; and unique proposition.

Marketing variables
A review of innovative marketing literature illustrates that three of its primary components
are product enhancement, alternative channels and methods of product distribution
(Carson et al., 1998), and an alteration of the marketing mix (Stokes, 1995), which, for the
purposes of this research, have been categorised as marketing variables.
Journal of Strategic Marketing 385

Product enhancement
In most instances SMEs engage in product enhancement, adopting a policy of incremental
rather than radical innovation. Customers are incorporated into the innovation process
(Mitsui, 1998), resulting in a more customised product or service (Cummins et al., 2000)
and ensuring customer co-operation at the crucial commercialisation stage.

Alteration of the marketing mix


SMEs engaging in innovative marketing responded to market requirements by altering
their marketing activities, instead of adopting an innovation orientation whereby a new
product is developed first before seeking a market (Cummins et al., 2000). This approach
to marketing looks: ‘for creative, novel or unusual solutions to problems, demonstrates a
willingness to commit resources to less than fool-proof opportunities and emphasises the
implementation of activities’ (Carson, Gilmore, & Grant, 1997, p. 463).
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Alteration of the distribution channel


Resource limitations ‘restrict market entry to markets where the business has insufficient
resources to compete successfully’ (Hogarth-Scott et al., 1996, p. 7) and therefore SMEs
utilise alternative channels and methods of product distribution (Carson et al., 1998;
Johne, 1999) to gain competitive advantage, cost efficiency and customer satisfaction.

Modification
SMEs define the basis of their marketing activities as innovative (Siu, 2000) in terms of
being proactive and by embracing change management (Carland, Hoy, Boulton, &
Carland, 1984; Carroll, 2002; McAdam, Stevenson, & Armstrong, 2000; Nieto, 2004).

Proaction and change


Innovative marketing can be classified as either continuous or discontinuous. Continuous
innovative marketing is found to be incremental, building on existing practices and
products, while discontinuous innovative marketing is described as more inventive and
unrelated to current practices and products (McGowan & Rocks, 1995; Veryzer, 2005).

Integrated marketing
Innovation is pervasive throughout marketing (Hills & LaForge, 1992; Simmonds, 1985),
where adjustments regularly need to be made to current activities and practices. This leads
to the need for marketing integration and the permeation of marketing throughout
the SMEs.

Marketing integration
Innovative marketing incorporates all SME marketing activities; it is guided by profit
goals, is market-led and reactive, is continuous and is not necessarily a new idea. It can
be incremental and grounded in existing activities and practices, but whatever form it takes
it is built upon an integrated approach to doing marketing.

Permeation of marketing throughout SMEs


Following on from above, SME innovations (or adaptations) of marketing build upon their
strengths and enable them to differentiate their product or service from the standardised
offerings of larger firms, possibly within a niche market (Cummins et al., 2000). It depends
386 M. O’Dwyer et al.

upon the perceived value of marketing throughout the organisation, the integration of
marketing fully into the organisation, and its application to achieve organisational goals.

Customer focus
Customer-satisfaction and customer-orientation are strongly associated with success in
smaller firms (Blythe, 2001; Brooksbank et al., 1992; Mohan-Neill, 1993), where
considerable emphasis is placed on personal relationships in developing a customer base
(O’Donnell & Cummins, 1999; Stokes, 2000) and on the significance of customer
satisfaction to competitive success (Pearce & Michael, 1996; Siu, 2000).

Market focus
A review of the literature illustrates that market focus includes vision (Ahmed, 1998;
Carson & Grant, 1998; Knight et al., 1995; Kuczmarski, 1996), profit (Cummins et al.,
2000; Tower & Hartman, 1990) and being market-centred (Carland et al., 1984;
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Johannessen, Olsen, & Lumpkin, 2001; Wang & Ahmed, 2004).

Vision
The entrepreneurs’ interpretation of the external marketing environment and their vision
for the firm is central to their decision-making process. Marketing decisions are based
upon the interpretation of relevant data and depend on the experiential knowledge and
vision of the entrepreneur (Carson & Grant, 1998; Grant, Gilmore, Carson, Laney, &
Pickett, 2001; Hill, 2001), which in turn lead to a profitable SME.

Profit
Creating and sustaining competitive advantage (Johannessen et al., 2001; Knight et al.,
1995; McAdam, Armstrong, & Kelly, 1998; McAdam et al., 2000), stemming from
innovative practices are a key factor in SME profitability and long term growth and
survival (Doyle, 1998; Knight, 1996; Quinn, 2000; Salavou, 2004).

Market centred
SMEs succeed by exploiting the opportunities larger firms have either ignored or have not
been able to exploit due to bureaucratic structures. Such innovative ability gives SMEs
their competitive advantage, a key element in capturing market success and inter-firm
competitiveness (Conrad, 1999; Mole & Worrall, 2001).

Unique proposition
Innovative marketing is dependent upon uniqueness (Cummins et al., 2000; McAdam
et al., 2000; Pitt, Berthon, & Morris, 1997); newness (Cummins et al., 2000; Johannessen
et al., 2001; Lado & Maydeu-Olivares, 2001) and unconventionality (Stokes, 2000),
which, for the purposes of this research, have been categorised as unique proposition.

New
Innovation commonly refers to new products or processes introduced by SMEs in order to
address customer needs more competitively and profitably than existing solutions
(Mone, McKinley, & Barker, 1998; O’Regan & Ghobadian, 2005; Zahra, Nielsen, &
Bognar, 1999). This enables SMEs to focus on achieving competitive advantage through
added value marketing approaches (Grant et al., 2001).
Journal of Strategic Marketing 387

Unconventional and unique


Successful entrepreneurs undertake unconventional marketing, focusing initially on
innovations to products and services, followed by addressing customer needs
(Stokes, 2000). Such marketing activities can be highly innovative, but are not necessarily
based on originality, and are more likely to be an adaptation of an existing concept or
practice; therefore, the innovation lies in its unique application to a particular company or
situation (Cummins et al., 2000).
Given the relationships established in literature between innovative marketing and
SMEs a conceptualisation of innovative marketing from the perspectives of SME
decision-makers is illustrated in Figure 1.
Although prior research has established the individual relationships depicted in
Figure 1, the debate on innovative marketing in SMEs has not considered the sum of these
relationships from the perspective of SME decision-makers. This ‘gap’ in understanding
of innovative marketing in SMEs is addressed in this study.
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Research approach
In exploring the issue of innovative marketing in SMEs a qualitative approach to research
was adopted to allow SMEs to be viewed in their entirety (Carson, Gilmore, Perry, &
Gronhaug, 2001; Gilmore & Coviello, 1999; Grant et al., 2001; Shaw, 1999). This
approach facilitated in-depth understanding of the reality of the SME and the
interpretation of SME perceptions, while taking into account the unique characteristics
of the human participants involved (Carson et al., 2001; Gilmore & Coviello, 1999; Grant
et al., 2001). Such an approach enabled deeper investigation which facilitated and
contributed to theory development. The interpretative research approach adopted featured
the use of case studies to maximise the contextual richness and complexities of SMEs
(Yin, 1994) and utilised the range of qualitative research techniques, such as direct
observation, interviews and archival material, while facilitating longitudinal research in a
natural setting.

Figure 1. Conceptual model for innovative marketing in SMEs.


388 M. O’Dwyer et al.

Table 1. Case company profile.

Number Size – relative


Case company Established Industry of employees to industry
SME 1 – Systems development 1984 Electronics 50 Small
solutions company
SME 2 – Software consultancy 1998 Software 40 Medium
SME 3 – PCB manufacturer 1998 Electronics 40 Small
SME 4 – Motor factors manufacturer 1970 Mechanical 100 Small
SME 5 – Electronic display company 1980 Electronics 80 Small
SME 6 – Wood products manufacturer 1981 Wood 80 Medium
SME 7 – Print media company 1986 Media 70 Medium
SME 8 – Heritage tourism company 1963 Tourism 180 Medium

Eight case SMEs were selected (see Table 1 for details) on the basis that they satisfied
a qualitative definition of an SME, which includes criteria such as ownership/management
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of an independent enterprise (Carson & Cromie, 1989; Loecher, 2000), and the size of the
company in terms of employee numbers and turnover, that is the enterprise must be small
when compared with others in its industry (Carson & Cromie, 1989; Loecher, 2000).
In addition, the chosen SMEs satisfied the definition of innovative marketing adopted for
the research and satisfied the researcher that they could highlight key insights regarding
the phenomenon being researched (Ettlie & Subramaniam, 2004).
The in-depth interview protocol was completed over a series of interviews, and by
attending at least one general management meeting in each company. The primary
research lasted 24 months, comprising 86 interviews with eight case companies. The first
interview question was open-ended, and almost content- and jargon-free, so that the
answer could capture the respondent’s, not the researcher’s perception (Gilmore &
Coviello, 1999; Perry, Riege, & Brown, 1999). Each interview was guided by a topic list
which formed the basis of the interview, facilitating in-depth exploration and investigation
of the key innovative marketing variables identified in the literature.
In analysing the case interviews, it is customary to commence by focusing on a case-
by-case breakdown before engaging in cross-case analysis (Carson et al., 2001; Miles &
Huberman, 1994). Thus, the data analysis progressed through a succession of steps,
starting with open codes which were derived from the data, following with more abstract
codes, and finally, forming the foundations of theory with a final set of conceptual and
theoretical codes (Goulding, 1998). As such, coding was crucial in identifying emerging
concepts from the data that were employed in the analysis of the phenomenon, and in
theory building, in this research (Catterall, 1996). Codes were evaluated and re-evaluated
for their interrelationships, by engaging in a continual and systematic search for
similarities and differences in data categories and issues and concepts identified from the
literature review (Shaw, 1999). This process was aided through the use of the NVivo
software package, which was designed to assist in interpreting and analysing data
(Dembkowski & Hanmer-Lloyd, 1995; Maclaran & Catterall, 2002). The software
facilitated efficient data management such as cataloguing and recouping data, illustrating
relations between data, enabling text searches and helping to highlight links within the
data (Maclaran & Catterall, 2002).

Empirical findings
In exploring the empirical findings in the context of the literature reviewed, elements such
as customers, the integrated marketing function and market conditions appeared in
Journal of Strategic Marketing 389

definitions of innovative marketing, however themes such as strategic alliances, product


quality and image did not. The emergence of these three themes as significant elements of
innovative marketing is a major insight (or at least additional to the traditional SME
literature) into the perspectives of SME decision-makers.

Marketing variables
SME owner/managers did not perceive marketing variables to be an explicit focus of
innovative activity to drive the success of their business, viewing them as incidental or
basic ‘hygiene factors’. However, based on the empirical findings marketing variables
were found to be very important for innovative marketing in five of the case companies
(SMEs 2, 3, 5, 6 and 7), thus the practice of these SMEs did not reflect their perception.
Closer examination of the elements comprising marketing variables, showed that
product enhancement was very important for six of the eight cases (SMEs 1, 2, 3, 5, 6 and
7). For example, SME 1 supplied embedded system development solutions to major
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industries worldwide, continually expanding its product portfolio through product


enhancement and new-product development. This strategy was also reflected in SMEs 2,
3, 4, 5 and 6 development of the marketing mix, whereby continual alterations to the
traditional marketing offerings were implemented so that they could achieve competitive
advantage. This competitive advantage was underscored in SMEs 3, 6 and 7 who
experimented with altered distribution channels and systems to maximise their
distribution, as illustrated by the comment: ‘we’re always looking for more distributors’.

Modification
Modification was perceived by SME owner/managers to be a central element of their
marketing activities, recognising their need to engage in continuous incremental change.
This was reflected in marketing practice where six of the case companies (SMEs 1, 3, 4, 5,
6 and 7) identified modification as a central element of their innovative marketing. SME 1
demonstrated a proactive and change oriented approach towards its marketing plan. SME
1’s marketing plan ‘is reviewed monthly on its validity, and results are measured against
the set targets. The plan in its totality is reviewed and adjusted in line with results, new
ideas and experience’. This enabled SME 1 to plan for success in a dynamic marketplace.

Integrated marketing
SME owner/managers perceived integrated marketing to be one of the pillars upon which
successful business performance is based. This perception forms the basis of their
marketing practices, with all of the case SMEs illustrating their focus on effective
integrated marketing. For example, SME 6 found that its marketing function needed strong
leadership but needed to be integrated across functional areas within the SME permeating
all activities and practices:
you don’t isolate it from the projects you’re looking at; the marketing end of it is very
important . . . it has a make or break side to it, so from that point of view, yes, there’s a lot of
people involved, but somebody at the top has to have a good grip on it.

Customer focus
The customer orientation of SMEs identified in the literature was echoed in the perceptions
SME owner/managers had of the importance of their customers to actual marketing
390 M. O’Dwyer et al.

practice. This perception was supported by the empirical findings where seven of the case
companies (SMEs 1, 2, 3, 5, 6, 7 and 8) noted the centrality of customers to their
innovative marketing activities and practices. SME 8 found that ‘customer relationships
and promotion material . . . [are] very important to us’, with all of the SMEs having
changed their methods of conducting business in anticipation of their customers’ changing
needs and business environment. This was illustrated by SME 2 which operates in a
turbulent industry and found that its customers ceased to purchase in adverse market
conditions: ‘Market conditions have an effect on how you market, the whole focus changes
when the market is down, we’ve stopped marketing, we’ve stopped advertising, the theory
says we should market more . . . I mean customers aren’t out there.’ Recognising that this
was a short term reaction to an adverse external environmental stimulus, SME 2
re-doubled its customer focus, engaging in active customer relationship management
which resulted in increased sales.
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Market focus
SME owner/managers demonstrated their perception of the fundamental significance of an
external market orientation to the success of their business performance by engaging in
market driven, market focused, marketing activities. A strong market focus was evident
from the empirical findings with all eight case companies stressing the significance of
vision, profit and market centredness to their survival and success. This was illustrated by
SME 8 who noted that:
We can no longer depend on our traditional sources of business to provide growth. Therefore
we must analyse how best to approach the change. This analysis must consider not only the
sources of business but also the shape and price of the products we intend to offer the market.

Unique proposition
The uniqueness of their proposition was perceived by SMEs to be a central element of their
marketing activities, a perception supported by the literature which suggests that the key
themes of Kleindl et al.’s (1996) definition of innovative marketing such as newness,
refinement and market demand should be critical constituents of innovative marketing.
However, this perception was not fully reflected in the SMEs’ marketing practice. Only four
of the eight cases (SMEs 2, 3, 6 and 7) found ‘newness’ to be significant, also ‘uniqueness’
was only relevant to four SMEs (2, 3, 5 and 7), and ‘unconventional’ was significant for three
of the cases (SMEs 2, 3 and 7): ‘We’re all the time looking for new features’ (SME 7).
However SME 8 noted that: ‘While we are developing new products and forging into new
markets we must also continue to develop and maintain our existing markets and market
share.’ This statement acknowledges the dichotomy between generating ‘newness’ and
maintaining existing products and services. Despite the emphasis of the SMEs on these
elements in dialogue it was not reflected in their activities and practices.

Emergent themes
The empirical findings illuminated additional insights emanating from this study, some
of these elements were not explicitly perceived by SME owner/managers to be of
significance to their marketing activities, however they formed a significant component of
their marketing practice. These insights demonstrate the significance of image, strategic
alliances and quality to the innovative marketing practices of SMEs.
Journal of Strategic Marketing 391

Image
All of the SMEs in this study strongly emphasised the significance of image to their
innovative marketing activities and practices, with companies such as SME 1
acknowledging that its image as a world class sub-supplier was pivotal to its marketing
activities and practice: ‘aesthetics and image are important in this industry’, ‘if the product
is right, and the image is right, the customer is a given’. This was reflected by SME 2 who
noted that: ‘promotional material is important . . . you do have to create an image that you
are up there, one of the leading suppliers of these products’.

Strategic alliances
The SMEs illustrated their focus on the strategic satisfaction of customer needs which has
resulted in the SMEs forming strategic relationships. These relationships vary in terms of
partners with some of the SMEs forming strategic relationships with similar companies in
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other countries, others with customers, yet others with suppliers and some with
competitors. Not only does the content of the relationship vary, so too does its nature, with
varying degrees of commitment being exhibited from equity joint ventures to discrete
repeat contracts. For example SME 8 noted that: ‘strategic alliances in the form of
strategic co-operative agreements with current key stakeholders are critical in building
long term visitor numbers . . . it’s important to us to maintain them and enhance them’.
The significance of such relationships was reflected by SME 4 whose strategic intent was
encapsulated in its determination to diversify its risk: ‘We have strong dependence on
dollar sales and are trying to develop strategic alliances and customers in the European
marketplace to balance that.’

Product quality
Product quality was noted by all SMEs as a fundamental pre-requisite of their innovative
marketing:
there isn’t a question that you can have a sub-standard product . . . there’s enormous pressure
on most products and you just have to benchmark it against what’s out there, and you need to
be at least as good, if not better. (SME 6)
However, having achieved (and surpassed) the required quality several of the SMEs
identified a difficulty articulated by SME 5,
in selling to the German market we found that the perspective of quality for Irish products was
very low, so products now sold to German companies are manufactured in Ireland but finished
in the Swedish subsidiary and that keeps the Germans happy.
This creative approach towards quality was reflected by other case SMEs who addressed
the same issue in other ways, such as engaging customers in their quality assurance
processes.
As illustrated in Table 2 all eight case companies identified key themes of Kleindl
et al.’s (1996) definition, such as newness, refinement and market demand, as critical
constituents of innovative marketing. In addition to these themes the following SMEs
identified other themes as integral to their innovative marketing: strategic alliances (eight
case SMEs), product quality (eight case SMEs), SME image (seven case SMEs),
customers (six case SMEs), change (six case SMEs), integrated marketing function
(five case SMEs), market conditions (four case SMEs), sales (three case SMEs),
392 M. O’Dwyer et al.

Table 2. Overview of key terms for each SMEs decision-makers’ perspectives of innovative
marketing.
Key terms utilised by SME to describe their innovative
marketing
SME 1 – Systems development New; refinement; market demand; market conditions;
solutions company strategic alliances; product quality; customers; integrated
marketing function; change; SME image
SME 2 – software customisation New; refinement; market demand; market conditions;
consultants product quality; SME image; customisation; integrated
marketing function; change; strategic alliances
SME 3 – PCB manufacturer New; refinement; market demand; product; product quality;
change; integrated marketing function; customers;
promotional material; SME image; strategic alliances
SME 4 – Motor factors manufacturer New; refinement; market demand; strategic alliances;
product quality; market conditions; strategic orientation
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SME 5 – Electronic display sign New; refinement; market demand; customers; sales;
company integrated marketing function; strategic alliances;
change; product quality; SME image
SME 6 – Wood products manufacturer New; refinement; market demand; customers; change;
sales; integrated marketing function; strategic alliances;
product quality; SME image
SME 7 – Print media company New; refinement; market demand; customers; change;
product quality; SME image; market conditions; strategic
alliances
SME 8 – Heritage tourism company New; refinement; market demand; market conditions;
customers; sales; promotional material; SME image;
product quality; strategic alliances

promotional material (two case SMEs), strategic orientation (one case SMEs) and
customisation (one case SME).
In identifying SME owner/manager perceptions of innovative marketing, it is
apparent that the most important elements include newness, refinement, a reactive or
proactive approach to market demand, the formation of strategic alliances with key
suppliers/distributors/customers/competitors, an emphasis on SME image, the attainment
and maintenance of product quality and a marketing function which is integrated
throughout the organisation. These elements form the core of innovative marketing
activities and practices in SMEs. The effective management of these innovative
marketing variables enables SMEs to decrease the impact of resource limitations on
their marketing activities and practices by leveraging additional value through
innovation.

Conclusion
This study has identified and clarified SME decision-makers’ perspectives of innovative
marketing and SME innovative marketing activities and practices.
While SME perspectives are consistent with the prior research which posits that
these variables are elements of SME innovative marketing activities and practices
(Cummins et al., 2000), the findings from this study did not support the view that altered
distribution channels were an element of SME innovative marketing practices and
activities (Carson et al., 1998). In addition, although the concept of uniqueness is
important to the SME business proposition according to the literature; this perception is
not supported by marketing activities in practice. Being unique, that is, significantly
Journal of Strategic Marketing 393

different to competitors does not appear to be related to business success, however it is


related to their strong customer focus. SME customers take a risk when they buy from a
smaller firm without a recognised international brand name, therefore SMEs engage in
incremental rather than radical innovations thus reducing risk to customers but this also
has the effect of reducing the uniqueness of their proposition.
Based on this evidence this study illustrates the innate awareness of SMEs
regarding their customers, their markets and their own abilities. The findings also
demonstrate that the emergent innovative marketing concepts of SME image, strategic
alliances and product quality are integral to innovative marketing activities and
practices.
From this study it is evident that innovative marketing in SMEs can be a proactive
and/or reactive integrated organisational approach based on refinement, newness, image
management, product quality and the formation of strategic alliances with key constituents
in the context of competitive market circumstances. Future research will explore the
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applicability of these findings to a range of SMEs in different geographic locations and


different industry sectors, thereby adding further richness to the data.

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