Small businesses will play a bigger role in driving the U.S. and global economies over the next decade. According to Small Business Administration: Office of Advocacy, in 2009, there were 27.5 million businesses in the United States, according to Office of Advocacy estimates. Small businesses employ about half of U.S. workers. Small firms accounted for 65 percent (or 9.8 million) of the 15 million net new jobs created between 1993 and 2009. While successful new enterprises have provided valuable contributions to the economy and society in general, their volatility and failure rate exact a cost to both. An estimated 552,600 new employer firms opened for business in 2009, and 660,900 firms closed. Seven out of 10 new employer firms survive at least 2 years, half at least 5 years, a third at least 10 years, and a quarter stay in business 15 years or more. Census data report that 69 percent of new employer establishments born to new firms in 2000 survived at least 2 years, and 51 percent survived 5 or more years.
Why do some small businesses survive and some fail? Several research indicates that management of people, continuing education, cash management, management of information, technology-oriented, and quality and marketing contribute to success of small businesses. Marketing is significant for small businesses' success. The popularity of Internet has made online social media a mainstream marketing tactic, but is it the key success factor to small businesses? I don't believe so.
Yes, online marketing has a lot of advantages. 1) Most online marketing is free. You just need to create an account and then you can market to anyone who has access to the site. It is very cost efficiency; 2) Time efficiency. News travels very quickly. Your current and potential consumers can get updated information of your businesses right after you post it; 3) Increased potential consumers. You can reach consumers that traditional marketing misses because people can easily refer or direct their friend to your site; 4) Build consumers relationship. You can use it to demonstrate your personality, interact with consumers with live chat and comments, and show them that you care; 5) Feedback efficiency. You can learn how to improve your products and services. By encouraging open communication through public comments, you can learn what your consumers need and want and make your products more palatable.
However, there are downsides of online marketing. It is time efficiency, but time-consuming too. You need to contribute continual time and effort to create a positive, relevant presence. It will take time away from initiatives that might suit your business better. Sometimes news travels too fast for you to keep up with the reactions (good or bad) from your followers. You need to keep coming up with innovative exciting content that interests a variety of readers. Otherwise, all your efforts will be wasted. You have no control of your followers. Anybody can comment your business and criticize it. If a person does not like you or your business and writes negative comments, you may lose a lot of potential consumers if somebody new to your site reads those comments.
I believe online marketing is a great strategy for marketing small businesses, but it is not the key success and needs to be used carefully. Before going online media marketing, several questions need to be asked. First, will the person run online marketing technology savvy? Second, how much time will be dedicated to online marketing? Third, is the content appropriate and interesting enough for public? Small business needs to combine with other marketing strategies. For example, charity donation is a great approach. You can donate money or your time. It will be a big return even if you only donate a small amount of money or time. Sponsor your local sport team is another approach because sport is a very important part of United States culture.
Yes. I agree with your opinion that social media is not key success factor. Social media marketing give customers too much empowerment and knowlege. Since customers are direclty involved in companies' products development, customers have too much information about products, specially about their prices. Those highly educated cutomers are very sensitive to products. Therefore, much more effort will be required to meet those higher customers' expectation.
ReplyDeleteThere is an interesting issue about charity donation. To establish more positive images, companies have conducted Cause-Related Marketing. Although these cause-related marketing brings benefits to everyone, these is new criticism. Cause-related marketing is unethical business conducts. According to opinion, "cause-related marketing is much more a strategy for selling products than a strategy for giving."
Companies face a lot of new issues in today's danamic envirnment. I believe how companies adapt to these dynamic environment is key success factor.
Qin you touched some positive points of the online social media for marketing the products and some negative. I would like to comment on the negative points that you have.
ReplyDeleteYou say that the online social media takes away more time which can be better used for the business functions and also the content has to be innovative and is very time consuming. But I would say that the other means of marketing such as Television and newspaper are not as cheap as the online marketing, even in the tv advertisement world you have to come up with the new advertisement concepts which attracts the customers and that requires a lot of marketing contribution and extra costs. And in the last paragraph you doubt about many questions whether they can be answered or not, but those questions can be answered only once you take up the task. Also do not forget that the negative comments from the customers can serve as the great source of feedback and will only help company to perform better.
Qin, it seems according to your blog that you may find it a bit hard and costly to use social media as an advertising tool. I believe that the Internet, and specifically social media, has allowed new players to the market “game”. And as you, so accurately posted it, small businesses are a significant part of economical dynamics and growth, so I would encourage this type of businesses to invest time, efforts and money in this kind of advertising in order to be able to do one of two things:
ReplyDelete1. Gain existing customers and clients by “stealing” them from other big competitors
2. Expose your new and innovative products or services to people in different areas.
Even though a successful business is combination of different factors, my personal experience tells me that it doesn't matter if you have the best product, or the best service, the fastest response time or the newest solution if you can’t communicate with your target audience! Maybe the most important pillar in the construction of a company is the way a company can create a direct relationship with its customers.
Small companies do not have the ability to work with lots of cash or other assets, so productivity, lean manufacturing and other quality control mechanisms have to be apply to all the areas of the company, this include the advertising budget!! There are many ways to advertise but one can say that social media has the best cost/benefit ratio for small companies in the present.
Certainly, the online social marketing approach to customers should be use carefully by small businesses. It could work both sides: allow small companies to reach a market scope that otherwise would not be possible due to resources constrains or sink enterprises that use the tool with disregard of opportunity cost of resources, effects of negative feedback and appropriate content for target audience. Is it the key factor for success? I agree is not. Nevertheless, it seems that using online social media is more a necessity than an option for companies that want to remain updated against the increasing number of competitors using the tool for advertising.
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