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As a fact, promoting goods or services in the marketplace is the cornerstone of virtually any business. In the first part of this essay I would like to consider some of the fundamental marketing concepts, strategies push and pull in explaining the factors that influence the decision of individuals to become self employed and/or start up a business. As an example I would try to use these strategies in the context of trade in software or online services.
For example, imagine that you have something that you decided to promote on the market. You wrote an excellent program, or come up with a new service, without which, you convinced, a modern society can not live. After celebrating the successful testing of the final version of the product/service in front of you getting a tough question about how sell this thing. And even more - where to start?
It can be said that push strategy consists on the situation when the main selling product goes through a developed dealer's network. Naturally, nothing prevents you to sell it by yourself, but the main sales are implemented through different agents, brokers and representatives. The main task of the dealers - is to provide you with the customers flow. Your task - is to keep pace with their service, as stated in Push-and-Pull with your Marketing Strategy.
This marketing concept is better to use in following cases:
You have staple product and it does not imply a deep customization or other "individual approach". For example, you have a very useful plug-in for your browser or script that performs a specific narrow problem. The best example here may be an organization of McDonald's business: the standard menu, but if you want a hamburger without the chops with mustard - you must go to a restaurant.
You are a new man at the market, no one knows you. In this case, you can "borrow" the reputation of the dealer, because main risk to the end customer is dealer's risk. The client always will be complaining for the seller of the product. As a fact, if your program will sell by Adobe Company you generally will not think about your own brand. The main thing is to do your part well, and for the rest - popular dealer's brand will take care.
You are not going to stay for a long period of time in this market segment and the release of the product of has temporary nature. For example, you wrote a program that is able to collect statistics of soccer's World Cup 2010 matches. This program will be relevant only during the championship, but you need to sell it quickly and as many copies as possible. You have no time for build your own sites network, either to hire and train staff, as described in Push and Pull Your Marketing Strategies to Gain Maximum Results.
It should be noted that like any other marketing concept push concept has its disadvantages. I would like to consider them more closely:
It is always good when a dealer has good reputation, but you still have to advertise your own product. In this case, money spent on advertising and promotion, partly would be spent on the dealer. By advertising your product, you advertise and your dealer too. As a fact, after watching advertising Windows 7, you will go to the nearest store that sells software, rather than go to a central thread of Microsoft shop somewhere in Seattle.
By giving the main sales to dealers, you will not be exempt from the costs associated with sales. Push strategy consider a developed system of discounts for resellers, various contests, loyalty programs, providing them with various promotional materials, salesmen training and so on. In this case, nothing keeps dealer to break the contract. As a result, all your attempts will cost nothing.
With this strategy it is difficult to control and predict sales. You get to a certain dependence on dealers and agents, who are always pursuing their own interests and it is better that they always agree with yours. Also very important that the breach of contract with a key dealer can almost completely block the flow of new customers. This is a fairly common situation where the agent is "big" and you - "small", as stated in Push and Pull Your Marketing Strategies to Gain Maximum Results.
It should be noted that pull (attraction) strategy consider a situation when you try to sell your product by yourself. Your task - is to ensure maximum customer loyalty to you. This marketing concept is better to use in following cases:
When you came into this business with "long haul". When you are going to release a lot of services and software products under your brand. I think the perfect example in this case is Google. Now everyone knows that if Google released something, then it is worth at least to look at this.
When you have some extra time, during which you can suffer losses due to poor customer activity.
When your product is unique or exclusive. You are going to market with this product as an element of prestige and service for the elite. In this case, it is desirable to sell the product by yourself, because nobody going to a supermarket for elite and luxury goods. As an example it can be a comprehensive service to create an online store for some thread manufacturer, from the development of a unique engine, its content, promotion and retention of top positions for your desired keyword.
When you want to attract foreign investment into your business. Investors put money into the firm but not into a product that is sold on the shelves of resellers. Any investor knows that no matter how good the product was, his money will gone if the firm goes bankrupt because of bad management.
When you want to get a better capitalization of advertising costs. You have invested money in advertising, the price of your brand has increased, you have made the margin on the product and began to "return back" spending money without compromising circulation.
The more effective control of marketing and a more stable return on investment sales. As a fact, it is better to do/train, and unleash your own site sales than indirectly doing the same thing for the dealer.
I would like to consider disadvantages of pull marketing concept, among them:
Implementation of this strategy requires a lot of money and time, not everyone can allow it to himself. Typically, such "luxury" can afford minor projects of large corporations or those who have a solid "financial layer". For example, we can take Google services, most of them Google can afford to stay long with a loss because of huge profits from the sale of contextual advertising systems.
Your business depends heavily on your reputation. It should be understand that at stake is the credibility of your company, investment in which may exceed the value of the firm, as described in Push-and-Pull with your Marketing Strategy.
Of course it is difficult to judge whether a person should start up an own business or to be self employed. It depends on many factors such as business idea, amount of money and so on. But if we compare these two marketing concepts, I think, push concept is more preferable for starting own business. As a rule, pull concept requires a lot of money, time and good result is not guaranteed. However, in my opinion, pull strategy is more preferable if a person want to be self employed. Working in big companies allows having an opportunity to make a career, to be engaged in interesting projects etc. It should be noted that the ideal marketing strategy is always a combination of these concepts, because separately, their use is rare justified. I think everyone should clearly assess his capabilities and assess his efforts so as to keep sales at a sufficient level, thus minimizing the influence of both marketing concepts disadvantages to the product.
In this part of the essay I would like consider a rapid growth of small business sector in many economies in recent years (especially before 2008 world economic crisis), by describing the factors that in my opinion, have contributed to this growth.
As a rule there were several main reasons that contributed growth of small business in the most developed countries. It can be said that in 90-ies of XX century earnings of most developed countries population grew rapidly and, consequently, consumption grew too. With increasing income consumption system has changed. Food costs decreased, instead of that prices for durable goods increased (houses, cars, televisions, washing machines, etc). Significant factor in the economic boom of small business was international trade development, as described in Small Firm Growth in Developing Countries. As a fact, this situation in turn led to the internationalization of economic life, and pushed countries to the orientation on new technical level, because otherwise, their products were uncompetitive on the world market. In other words global competition forced small business to actively develop new scientific and technical solutions. Consequently, the first main factor that provided significant growth of small business was scientific and technological revolution.
Scientific and technological revolution has led to serious qualitative improvements in economic development, although its impact has been contradictory. As a result, technological revolution occurred following significant changes in the economy:
Automation of production;
Growth-oriented industries, which resulted in increased concentration of production;
Concentration of production combined with increasing economic role of small businesses;
The change in economic structure and employment - the number of people employed;
Non-productive sector exceeded the number of manual workers, and growing economy of developed countries entered a phase of post-industrial development;
Skill employment growth, as described in Small Firm Growth in Developing Countries.
In my opinion, there is no need to describe how important for the whole world were appearance of computers and the Internet. It gave powerful push to all industries and services markets. As a rule, today appeared a wide range of possibilities and different professions such as programmer or web designer which in turn contributed to small business diversification and naturally to its growth. It can be said that hundreds of thousands people, small business owners, work via Internet by having e-bookstore or travel agency all over the world.
The second main factor of small business rapid growth was liberal policy of credit granting. This policy was conducted by the U.S. Government, as a result Federal Reserve established low interest rate and commercial banks all over the country (the same situation was in Europe) willingly granted loans. By having a business idea and business plan any entrepreneur had an opportunity to grant a credit without any difficulties. Consequently, borrowed money allowed people to develop their business rapidly. As a fact a lot of entrepreneurs took repeat loan for several times and small business felt it confidently.
As other reason of a rapid growth of small business sector I would like to express favorable external environment. This includes: growth of international trade and other forms of international economic relations; the stabilization of exchange relations; the deepening of countries specialization and so on.
In the third part of the essay I would like to consider innovation in a small business and what factors contribute to successful innovation in small firms. Innovation - is implemented improvement, which has high efficiency. It is the end result of human intellectual activity, his imagination, creative process, discoveries, inventions and rationalization in the form of new or different from previous projects. Innovations are characterized by the introduction of the market entirely new (improved) products (services), intellectual property rights with greater scientific and technological potential, new consumer qualities, which, over time, in turn, become the target for improvement, as described in Innovation In Small Business.
In my opinion there are several factors that contribute to successful innovation to small firms, among them:
Availability of financial reserve and other facilities, equipment and other resources. Also advanced technologies, the necessary economic, scientific and technical infrastructure.
Legislative measures (especially benefits) that encourage innovation, government support of innovation. I think that small firm should monitor changes in governmental policy concerning innovations. For example, preferential taxation for the enterprises that implement innovations in its activity.
Moral encouragement of the innovation process participants, public recognition, providing opportunities for self-realization, liberation of creative work. Normal psychological climate in collective.
Flexible organizational structures, democratic style of management, the dominance of horizontal flow of information, decentralization, formation of task forces, as stated in Innovation In Small Business.
Innovative activity not only creates future shape of the enterprise, defining its technology, manufactured products, potential customers, the environment, but also the basis of its competitive position, and therefore a strategic position in the market. Modern small business should keep pace with the latest developments. The only way to achieve positive results is significant improving the quality of their products or services and simultaneously reduces the cost of production and sales of finished products.
To sum it up, I think, push concept is more preferable for starting own business while pull concept requires a lot of money, time and good result is not guaranteed. However, pull strategy is more preferable if a person want to be self employed. In my opinion two main factors that have contributed to rapid growth of small business were scientific and technical revolution and liberal policy of credit granting. There are several factors that contribute to successful innovation to small firms: availability of financial reserve; moral encouragement of the innovation process participants and flexible organizational structures.