Marketing Trap

How do SMEs grow their business? Its a question I’ve been pondering because we find ourselves in what I am calling a “marketing trap”. SMEs spend limited money on marketing (ads, PR, etc.) which limits their reach to potential buyers which in turn limits their new business. The biggest challenge for SMEs is not cost control (they already have a good handle on all that they are spending) but new business opportunities. The products and solutions are there, what is missing is the knowledge of who it can be useful (the prospects).

So far, the options are few – build a direct sales team or set up a channel. And then, perhaps back it up with some advertising – which is very expensive. Of course, if there was enough business being generated due to the ads, it would be another story, but in most cases, that does not happen because SMEs typically do not indulge in repeated advertising. The other possible options: direct marketing via post or by email (spam).

How does one get out of this marketing trap?

The Internet plays a very limited role in the marketing efforts for most SMEs. What is needed is an “information marketplace” – buyers should be able to say what they want, sellers should be able to talk about what they have to sell, and they should be able to find each other. Information needs to flow two-way between the smaller companies. Most are in each other’s neighbourhood, but don’t even know of each other’s existence. How can we solve this problem?

A few ideas I was thinking of:

– get SMEs to create a wiki and a weblog: the wiki could be a single page that they update whenever they want describing who they are, while the weblog has a mix of what is new and content/ideas related to their business, thus showcasing their “intellectual capital” and helping others differentiate. Yes, a website could do this too, but most websites are just not easily updateable.

– as SMEs publish their buy/sell needs, this can become an RSS feed which others could subscribe to. Feeds can be based on product category or by company. The RSS feeds could be delivered via an Info Aggregator-like service to a separate mailbox to the subscribers. The RSS feeds could link to the appropriate post on the SME’s blog which describes the need, and a link to the wiki page to find out more about the SME.

– the issue here one could face is “tragedy of the commons”. There would be an incentive to “spam” the process. These companies could be filtered out. One could use ideas from eBay’s rating system here.

– what this allows is for SMEs to find companies locally. So or example, if I am looking to buy a knowledge management software, Google is not very helpful – I need vendors locally, who will understand my requirements and show me a demo.

There’s still a lot more to be thought, but I am beginning to think that if we can create such a solution, it could not only help us generate more business, but also showcase some of the newer technologies (blogs, RSS) to the SMEs. Of course, the first challenge would be to get enough SMEs to start using the system to make it useful. This is a co-ordination problem: enough SMEs have to come in simultaneously, and they would then all be better off than they were.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.