THE IMPACT OF MARKETING MIX STRATEGIES ON MICRO AND

SMALL BUSINESS ENTERPRISES PERFORMANCE

(Case Study of Manufacturing Enterprises in Gondar City Administration, Ethiopia)

PROF. KOPPALA VENUGOPAL, SEWHAREG GETENET AND FIRNUS YALEW

ISBN: 978-81-935201-2-3

First Edition: 2017

Copyright © forum4researchers

All rights reserved. No part of this book may be reproduced or utilized in any form or by any
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CHAPTER NAME PAGE NO.

1. INTRODUCTION 01 - 11

1.1. Background of the study

1.2. Statement of the Problem3
1.3. Objectives of the Study5
1.3.1. General objective
1.3.2. Specific objectives
1.4. Research Questions
1.5. Scope of the Study
1.6. Limitation of the Study
1.7. Significance of the Study
1.8. Operational Definition of Concepts and Terms
1.9. Organization of the Paper

2. REVIEW OF RELATED LITERATURE 12 - 54

2.1 Review of Concepts and Theories

2.1.1 The Definition of SMEs
2.1.2 Common Characteristic of MSEs
2.1. 3 Micro and Small Enterprises in Ethiopia
2.1. 4 Marketing Strategy
2.1.5 Entrepreneurial Marketing in Small and Medium Sized Enterprises
2.1.6 Marketing Mix in Small and Medium Enterprises
2.1.7 The Marketing Mix of Micro-Enterprises
2.1.8 The Concept of Performance
2.1.9 Marketing Practices and Firm Performance
2.2 Empirical Literature Reviews
2.3 Conceptual Framework of the Study
3. METHODOLOGY 55 - 62

3.1 Research Design

3.2 Population of the Study
3.3 Sampling Design
3.3.1. Sample Size Determination
3.3.2. Sampling Technique
3.4. Data Source and Data Collection Procedure
3.5. Research Instrument and Measurement
3.6. Validity and Reliability of the Instrument
3.6.1. Validity Test
3.6.2. Reliability Test
3.7. Data Analysis Methods and Interpretation

4. DATA ANALYSIS, FINDINGS AND DISCUSSION 63 - 84

4.1. Introduction
4.2. Demographic Information of the Respondents
4.3. The Level of Marketing Strategies Practices of the MSEs
4.4. The Extent of Business Performance of the MSEs
4.5. Correlation of Marketing Strategies Factors and Performance
4.6. The Effect of Marketing Strategies on Business Performance
4.6.1 The Effect of marketing strategies factor on business performance

5. CONCLUSION AND RECOMMENDATION 85 - 88

5.1. Conclusion
5.2. Recommendation
5.3. Future Research Direction

REFERENCES 89 - 99

Appendix – I Descriptive Statistics of the Independent Variables

Appendix – II Assumptions of Liner Multiple Regression Model74
Appendix – III English Version of the Questionnaire
 1. INTRODUCTION

1.1. Background of the study

The current globalization market has made companies to see the
internationalization of their activities as a way to remain competitive. Marketing
strategy has become important tool globally for any organization to remain in
competitive market environment and was stronger (Gbolagade et al, 2013).

Owomoyela et al, (2013) also see marketing strategy as way of providing a

quality product that satisfies customer needs, offering affordable price and
engaging in wider distribution and back it up with effective promotion strategy.
Marketing strategy is a vital prerequisite of Industry's ability to strengthen its
market share and minimize the impact of the competition.

Ellis (2005) felt that marketing practices are the superior predictor of business
performance as there is a strong link between marketing practices and overall
business performance.

The role of marketing in small scale industry has been in continuous focus during
the last few decades. Some expressed concern that marketing may not be the core
of Small manufacturers, whereas others felt that it was not given due importance,
recognition, or resource by industry (Sivanand and Murthy, 1999).

Compared to large enterprises, SMEs face many unique challenges, including (1)
limited resources and lack of experience in conducting market research (Bamforth
and Brookes, 2002; Siu and Kirby, 1998; Verhees, 1998), (2) lack of marketing
skills (Callahan and Cassar, 1995; Carson and Cromie, 1990), and (3) the

1
tendency of limiting their marketing to “selling” within their own industry
(Carson, 1990) as cited by Yiming et al (2005).

Beck and Demirguc-Kunt (2006), report that small enterprises (along with
medium) are major derivers of both employment and economic growth
contributing to more than 50 % to GDP and 60 % to employment in developed
economies, These type of enterprises, however, constitute less than 30% of
employment and 17% of GDP in developing countries. Indeed, a study conducted
in Africa by the ILO finds that only 20% of the total populations of working age
group in many African countries were reported to have been working in the small
enterprise sector (ILO, 2003a). Micro-econometric studies using enterprise level
data from MSEs sector has indicated that many of these enterprises have low
levels of productivity, produces low quality products and grows only when they
were young (e.g., Mead snd Lieadholm, 1998; Tybout, 2000).

Now days, in almost all economies of the world especially in developing

countries in Africa and Ethiopia, micro and small enterprises are crucial and a key
factor for sustained growth and development. Okpara and Wynn (2007)
elaborated that MSEs are generally regarded as the driving force of economic
growth, job creation and poverty reduction in developing countries. They have
been the means through which accelerated economic growth and rapid
industrialization to be realized. In Ethiopian context, as to the Ethiopian
government’s strategy, Growth and Transformation plan, micro and small
enterprises are the bridge to achieve the goals of the government (MoFED, 2011).

2
Studies conducted so far concluded that the problem of MSEs are access to
working capital, inadequate infrastructure, high transactional cost, limited
managerial and technical experts and marketing problems (World Bank, (2008),
Hailay, (2003) and Gebrehiwot and Wolday, (2006).

As cited by Neneh and Van Zyl (2008) SMEs cover about 90% of African
business operations and contribute to over 50% of African employment and GDP
(Chodokufa 2009). Nevertheless, SMEs are still “plagued by high failure rates
and poor performance levels” despite their many contributions (Jocumsen 2004:
659). Moreover, because of their small size, a simple management mistake is
likely to lead to the death of an SME without providing it with an opportunity to
learn from its past mistakes (Bowen, Morara & Mureithi 2009). A study by the
Business Times (1997) established that more than six out of ten new businesses
fail within the first 18 to 24 months and identified factors such as lack of
planning, improper financing and poor management as the main causes of small
business failure.

Some of the major constraints of micro and small enterprises in Ethiopia affecting
the performance of MSEs are: Cumbersome rules/regulations related problems
such as high tax level, uncertainty about tax policy, high collateral requirement,
lack of/ inadequate business premise, lack of business support service and
inadequate access to credit, an inadequate access to finance, lack of infrastructure,
weak supporting institutional quality, access to land, access to raw material,
access to training, marketing and competition. Bureaucratic requirements,
penalties, weak legal enforcement, entry regulations and inability to use the

3
institutional enforcement mechanism were also among the major problems of
MSEs (Commission on Legal Empowerment of the Poor, 2006).

Therefore, this research intended to assess the impact of marketing strategies

practices on micro and small business enterprise performance a case study on
manufacturing enterprises at Gondar city administration. The study aimed to
assess the impact of marketing strategies practice on micro and small business
enterprise performance a case study on manufacturing enterprises at Gondar city
administration. This study is too important because, it enables micro and small
enterprise to improve their performance by identifying key components of
marketing strategies which affect enterprise performance of the city.

1.2. Statement of the Problem

Small scale industries are largely suffering on marketing front in the absence of
proper marketing strategies. In the era of globalization the small units have to
compete with medium, large and foreign companies as they are facing
competition directly or indirectly from these companies. Chaston (1997) observed
that poor marketing is one of key reasons of the failure of small firms. Customers
are becoming more and more powerful due to available product choices and
bargaining powers which are creating stiff competition in the local and foreign
markets.

Hence, due to increased competition there is need to opt for appropriate strategies
in the marketing mix (product, price, place and promotion) for the success of
organization and to remain operative and competitive in the markets.

4
However, there are inherent problems which affect long term survival and
business performance of MSEs due to lack of financial resources, management
experience, poor location, poor infrastructure, low demand for products or
services, corruption and shortage of raw materials (Akabueze, 2002). In this
regard, Hanna (2010) and MUDC (2013) found out that though their extent varied
across regions and cities in Ethiopia, irregular supply of raw materials, lack of
working premises, insufficient startup and working capital, lack of access to
market and access to land especially in Addis are the major obstacles of the
enterprises.

Marketing is a fundamental yet overwhelming concept for most SMEs as many

struggle to employ it effectively (Vanscheers, 2012). Marketing factors such as
competition, low demand for products, not being able to meet customer needs,
wrong pricing strategies, lack of knowledge, poor location, and product variety
and branding, all have an impact on SMEs. Dockel and Ligthelm (2009) point out
those SMEs undertake little marketing activities as they have difficulties
managing the various marketing challenges stated above.

However, SMMEs face tremendous challenges that threaten their survival and
growth (Jefferis, 2010). The challenges include access to markets, financial issues
and competitiveness (Centre for the Development of Enterprise, 2013). The main
problems of SMMEs include lack of funding, lack of expertise, lack of
innovation, no or poor planning, and poor management, lack of business acumen,
Poor and or no record‐keeping on the performance of business, poor quality
products, no or inadequate marketing, and lack of market. Access to markets
seems to be a major foundational concern among SMMEs. For that reason, this

5
research concentrates on SMMEs Access to markets (Stanbic Bank Botswana,
2013).

Most Ethiopian MSEs lack adequate market channels through which they could
market their outputs. Most of the time the quality, quantity and price would suit
the needs of many customers and potential suppliers are willing and able to
provide what is required .but neither side is aware of marketing their products
effectively as well as accessing and acquiring information on business
opportunities, the existing possibilities in designing appropriate marketing
strategy as crucial for the growth and development of micro and small enterprises
(MFI, 1997).

According to the Ministry of Urban Development and Construction (MUDC),

2013 Enterprises from the regional cites indicated that shortage of finance (42%)
to expand their business was their principal challenge, followed by lack of
working premise (28.3%); and lack of access to market or absence of linkage to
market. The study also showed that lack of access to land has been one of the
most crucial bottlenecks (26.4%) in Addis Ababa, problem of finance (25.6%)
and access to market (25.1%) were among the strong factors inhibiting the growth
of these enterprises in the capital. The survey also, reveals that 79.4% of the
sample enterprises in all the 13 sample cities do not have the habit of advertising
their products/services.

Marketing problems such as lack of product diversity, pricing problems, lack of

awareness how to compete in the market, limited business management and
salesmanship ability, limited capacity to promotional activities, and lack of

6
market related knowledge are also hindering the development of MSEs
(Assegedech, 2004).

The literature shows that there is a knowledge gap that needs to be filled by the
marketing researcher. The problem can be summarized as (i) the extent of a lack
of marketing strategies knowledge of the MSEs in city areas, and (ii) whether
MSEs are able to use relevant marketing tactics in order to grow.

Are micro and small business enterprise really performed well? An exploratory
research was undertaken to explore the impact of marketing strategies on micro
and small business enterprises performance by assessing their marketing
strategies practice, level of performance in terms of profit, market share and
customer satisfaction.

Therefore, conducting such a research seems essential in the light of the fact that
different problems centered in this sector. Hence, this study aims at identifying
the impact of the varied problems on the performance of MSEs. This study has
made an effort to analyze the varied problems of MSEs in manufacturing
enterprises at Gondar city and forwarded possible solutions to the policy makers
and business operators.

1.3. Objectives of the Study

1.3.1. General objective

The general objective of the research is to assess the impact of marketing

mix strategies practice on micro and small enterprise performance at Gondar
city.
7
 1.3.2. Specific objectives

Based on the general objective of the study, the following specific objectives are
developed:

1. To examine the level of marketing mix strategies practices.

2. To identify the extent of micro and small enterprise performance in the city.

3. To assess the relationship of marketing mix strategies with micro and small
business enterprise performance.

4. To analyze which factor of marketing strategies most predicts micro and small
business enterprise performance.

1.4. Research Questions

1. What is the level of marketing strategies practices at micro and small

manufacturing enterprise in the city of Gondar?

2. What is the extent of micro and small manufacturing enterprise performance

at the city?

3. What is the correlation of Marketing strategies and micro and small

manufacturing enterprise performance in the city?

4. Which factor of marketing strategies most affects micro and small

manufacturing enterprise performance?

8
 1.5. Scope of the Study

The study is bounded both from area of coverage and problems addressed. The
study has tried to analyze assess the impact of marketing strategies on micro and
small business enterprise performance at Gondar city. Marketing mix strategies
factors such as namely product, price, promotion and place are incorporated in
this study. The study was carried out from December, 2015 to June, 2016.

1.6. Limitation of the Study

As this study is confined to one specific area such as Gondar city, it might lack
generalizations. As a limitation to this study, shortage of previous studies on
similar topics used marketing strategies variables with MSEs performance.
Limited problem had also been occurred during the distribution of the
questionnaires and the respondent willingness to file the questionnaires.

1.7. Significance of the Study

The study is important because it provides an understanding in the area of

relations of marketing strategies practices and MSEs performance in the city. The
result of this research is also important to create awareness on the part of the
micro and small business enterprises about the most determinant variables that
can influence the level of business performance. The practical significance of this
study is embedded in information that can be useful in developing strategies.

This research hopefully initiates many concerned bodies to implement policies to

enhance performance, working conditions, and training programs for MSEs.

9
Furthermore, the study can be added to the existing literatures and may serve, as
additional source for reference and it can also serve as a spring board for other
researchers who want to conduct detailed research on the issue.

1.8. Operational Definition of Concepts and Terms

The study used some conceptual and operational words that are related to the
research objectives to define some of the terms in this study. The definitions are
as follow:-

Marketing strategies:-

Product: -refers to the goods and services you offer to your customers.

Price: -.refers to how much you charge for your product or service.

Promotion: - refers to the advertising and selling part of marketing.

Place: - refers to the distribution channels used to get your product to your
customers.

Performance:- - refers to the accomplishment of a give task measured against

present known standards of accuracy, completeness, cost, and speed.

MSEs: - micro and small enterprises working on manufacturing business

1.9. Organization of the Paper

This paper is organized as follows.

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The first chapter of this paper deals with background of the study, statement of
the problem, objectives, research questions, and scope, limitation of the study,
significance of the study and operational definition.

The second chapter of this paper concerns related literature review which
encompasses Theoretical, Empirical and Conceptual frameworks.

The third chapter describes the methodology for the study in detail, which
includes study design, population of the study, sampling design, sampling
technique, data source, data collection procedure, study variable and
measurement, reliability and validity and data analysis.

The fourth chapter of this paper focuses on the result of the study and discussion.

The fifth chapter deals with the conclusions, recommendations and future
researcher direction.

11
 2. REVIEW OF RELATED LITERATURE

2.1 Review of Concepts and Theories

2.1.1 The Definition of SMEs

Small- and medium-scale enterprises (SMEs) are a very heterogeneous group.

They include a wide variety of firms—village handicraft makers, small machine
shops, restaurants, and computer software firms— that possess a wide range of
sophistication and skills, and operate in very different markets and social
environments. Their owners may or may not be poor. Some are dynamic,
innovative, and growth-oriented; others are traditional “lifestyle” enterprises that
are satisfied to remain small. In some countries, SME owners and workers are (or
are perceived to be) dominated by members of particular groups. Microenterprises
are normally family businesses or self-employed persons operating in the semi-
formal and informal sectors; most have little chance of growing into larger scale
firms, accessing bank finance, or becoming internationally competitive. Serving
them often requires distinct institutions and instruments, such as the group-based
lending methodologies used by some microfinance institutions. In contrast, SMEs
usually operate in the formal sector of the economy, employ mainly wage-earning
workers, and participate more fully in organized markets. SME access to formal
finance is a desirable possibility, and SMEs are more likely than microenterprises
to grow and become competitive in domestic and international markets.

The statistical definition of SMEs varies by country, and is usually based on the
number of employees or the value of assets. The lower limit for small-scale
enterprises is usually set at 5 to 10 workers and the upper limit at 50 to 100

12
workers. The upper limit for “medium-scale” enterprises is usually set between
100 and 250 employees. Since statistical definitions vary, it is very difficult to
compare size distributions across countries (Figure 1). However, one should not
be overly concerned about the lack of consistency in employment-based SME
definitions, since the number of employees, viewed in isolation from the size of
markets or the economy, may be misleading. For example, a 50-employee firm in
the U.S. would be considered “smaller” (relative to the size of the U.S. economy)
than a 50-employee firm in Bolivia.

Moreover, other characteristics of the firm, such as the degree of informality or

the level of technological sophistication, may matter more than the number of
employees as a segmentation factor (Kristin H, 2010).

2.1.2 Common Characteristic of MSEs

There are assumptions that are common characteristics of MSEs. These common
characteristics are; they have few employees, give low income, not experience
much growth and do not produce for markets outside their local environment
(Eversole, 2003).

Employment Generation

Available evidence suggests that micro enterprise do not show growth in terms of
number of people employed (Mead and Liedlholm, 1998).While small firms
experience both high job creation and destruction rates, it appears that job
destruction during recession is lower in small enterprise than in large enterprises
perhaps due to greater wage flexibility in small firms (Snodgrass & Biggs 1998).
In contrast, large firms offer better in terms of wages, fringe benefits, good
13
working conditions, opportunities for skill enhancement and job security
(Snodgrass and Biggs 1998).

According to the study made by liedlholm (2002), the closures rate for MSEs of
developing countries in Africa and Asia is occurred in the early years of firm’s
existence. In Kenya, Botswana, Swaziland, and Zimbabwe, over 50 percent of the
small firms get closed within three years of start up. Ibid page 22 added that
’’Since small firms have higher gross job creation and destruction rates than
large enterprises, small firms may offer less job security than large firms. In the
US for both new and already existing jobs, Jobs durability increases with firm
size’’.

Location and Survival Rate of MSEs

Location can play a central role in determining MSEs survival. MSEs located in
urban or commercial areas are more likely to survive than their counter in rural
areas. Those that operate in commercial districts or on road sides typically show
greater growth rates than those that are based on their home, although it can vary
at the country level (Liedlholm, 2002).

Gender and MSEs

According to op.cit based on the study of the nine countries; in five of these
countries women outnumber men as owners and operators of MSEs. Those small
firms tend to be concentrated in relatively specific activities like beer brewing,
knitting, dress making, crocheting, cane work and retail trading. Ibid page 5 added
that MSEs headed by women are more likely to be based out of their homes.

14
Home based MSEs tend to be hidden to markets and because most homes are not
on streets that people pass.

Labour Distribution in MSEs and Large Enterprises

Small firm expansion boosts employment more than large firm growth, because
small firms are labor intensive, coinciding with the factor market structure of
most developing countries. Many analysts argue that within industries, for a given
scale of production, small firms are more labour intensive than large firms.
However there are some evidences suggests that enterprise scale is an unreliable
guide to labor intensity because many small firms are more capital intensive than
large firms in the same industry. Labor intensity exhibits more variation across
industries than among firm size groups within industries (MSE DEGPR, 2006).
According to the study made by Sondgrass & Biggs (1998) depicted that „‟ The
fact that small firms employ a large share of the labor force in developing
countries may be a more reflection of the product composition of production in
those countries than inherent labor intensity of small firms’’.

Income

While there are many exceptions to the basic pattern, the evidence suggests that
larger employers offer better jobs in terms of wages, fringe benefits, working
conditions and opportunities for skills enhancements as well as job security. In
low-income countries, small enterprises have much lower productivity levels than
larger firms which lead to lower wages and non wage benefits. There is some
evidence that this divergence in labor productivity and wage rates between small

15
and large firm‟s narrows as countries become more developed in terms of
industrialization (Snodgrass and Biggs, 1998).

Efficiency and Innovation in MSEs

Efficiency and innovation is one of the determinants in MSEs survival. Sondgrass

and Biggs (1998) stated that;

“There has been a substantial difference detected in economic efficiency among

enterprise of varying sizes. It is often argue that small firms are more innovative,
particularly when they follow “niche strategies” using high product quality
flexibility and responsiveness to customer needs as a means of competing with
large scale mass producers’’.

Measures of enterprise efficiency vary greatly both within and across industries.
Those that varies are labor productivities or total factor productivities. Among the
total factor productivities; financial market, imperfections such as information
asymmetries, transaction costs and contract enforcement costs are particularly
affecting the poor who lack collateral and credit histories not to work efficiently
(Beck, et.al, 2004 cited in MSE Degpr, 2006). Joseph Schumber (1995), a
remarkable analyst and advocate of capitalism, asserted that the hall mark of
capitalism is innovation. The only survivors are those who constantly innovate
and develop new products and process to replace the old ones (Brown and Latour,
2004 cited in Edmison, 2004).

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Market Linkage

In a study made by MSE DGPR (2006), it is described that “Market linkages

amongst small firms are quite limited. The majority of small firms sell directly to
final consumers although some use contracting and clustering’’. The study of
Millhold (2002) suggests that those MSEs that sell to traders and manufacturing
firms are more likely to grow than other MSEs sells to final consumers and in
view of (Small Enterprise Assistance Funds, 2004) that “Smaller business may
import fewer intermediate goods. A greater amount of products are purchased
from labor intensive MSEs which may produce a large local multiplier effects”.
This in turn can lead to increased opportunities for locally sustainable growth and
employment.

The quality of employment in MSEs

Employment growth in small enterprises does not necessarily reflect a successful

development strategy. It is also important to consider the quality of employment,
which can be broadly defined as the work-related factors that have an impact on
the economic, social and psychological well-being as well as on the health of the
employed persons (Reinecke,G. 2000).

On average, jobs in small enterprises are less productive, less remunerated, less
secure and less unionized than jobs in larger enterprises, even after controlling for
observable workers characteristics, such as education, sex and age (Reinecke, G.
2000). For instance, the study by Soderbom (2001) estimates that in Ghana’s
manufacturing sector, a 10 percent rise in firm size is statistically associated with
a 1.6 percent rise in earnings. For these reasons, many people concerned with
17
employment quality and industrial relations view the growing emphasis on small
enterprise employment as a threat rather than an opportunity. Moreover, as
mentioned above, some people find work in small enterprises simply because they
have no alternative. For these persons, it is a kind of survival strategy that is
adopted despite low and possibly declining returns until something better comes
along. As such, it is a reflection of economic failure rather than success. These
enterprises can be very important in helping a large number of very poor people
become a little less poor but they can generally not provide employment of high
quality (Op.cit, 2000).

Most studies considering employment quality in small enterprises largely focus on

income levels (or profits for the enterprise owner in the case of very small
enterprises). Obviously, income is indeed a crucial dimension of employment
quality, especially in countries where many workers‟ incomes are insufficient to
move the household they live in beyond the poverty line.

2.1. 3 Micro and Small Enterprises in Ethiopia

Based on the gathered experience, by identifying the gaps of the existing

definition of

MSE, ignoring the size of employee and by taking total asset as criteria and by
dividing it in to industry and service sector; and considering the coming 5 years
inflation and Fluctuation/regularity of currency the definition of MSEs was
improved in January 2011 as follows.

Based on the revised sector both micro and small scale enterprises are categorized
in to industrial sector and service sector under industry sector (manufacturing,
18
construction and mining) micro enterprises are defined as an enterprise that
operates with 5 people including the owner and/or their total asset is not
exceeding Birr 100,000. (MSEDS strategy, 2011).

Under service sector (retailer, transport, hotel and Tourism, ICT and maintenance
service micro enterprises are defined as an enterprise that operates with 5 persons
including the owner of the enterprise and/or the values of total asset is not
exceeding Birr 50,000.

Under the industry sector (manufacturing, construction and mining) small

enterprises are defined as operates with 6-30 persons and/or with a paid up capital
of total asset Birr 100,000 and not exceeding Birr 1.5 million. (MSEDS strategy,
2011).

Under the Service sector (retailer, transport, hotel and Tourism, ICT and
maintenance service) Small enterprises are defined as operates with 6-30 persons
or/and total asset, or a paid up capital is with Birr 50,001 and not exceeding Birr
500,000.

When ambiguity is encountered between manpower and total assets as explained

above, total asset is taken as primary yardstick (MSEDS strategy, 2011).

In Ethiopian perspective, categorizing enterprise as micro or small is based on

their involvement in the industrial or service activities. Industrial activities
include manufacturing, construction or mineral related while service's activities
include trade, transport, hotel and tourism. Size of workers and capital are also

19
important parameters to distinguish the level of enterprises as indicated in Table
below.

Ethiopian Definition for Micro and Small Enterprises

Level Sectors Manpower Total Asset Norm Equivalent to

size (Birr) USD

Micro Industry ≤5 10,000 $5000

enterprise

Service ≤5 50,000 $2500

Small Industry 6-30 1,500,000 $75000

enterprise

Service 6-30 500,000 $25000

Source: federal democratic republic of Ethiopia, Industry Development Strategy

Document, 2001, Addis Ababa

As indicated above, Manpower and total assets are taken as criteria to categorize
enterprises as a micro or small level. The table indicated that within the same size
of Manpower, high capital is required for the sector to be considered as an
industrial subdivision. However, if there is ambiguity between Manpower and
total asset, priority is given for the asset criteria to categorize the enterprise. In
table 1, it is shown that less than or equal to five workers are sufficient to
establish micro enterprises both for the industrial and service sector. Conversely,
the capital amount varies from $5,000.00 for industry to $2,500.00 to services. In

20
the meantime, for small enterprises, the Manpower range from 6 to 30 in both
industry and service sectors and capital varies from $75,000.00 for industry to
$25,000.00 for the service sector.

Location and working space problems: For MSEs, lack of premise is

unquestionably a serious problem. Most informal operators do not get access to
suitable locations where they can get easy access to markets. The issue of
acquisition and transaction cost has become very prohibitive to the emergence of
new enterprises and to the growth and survival of existing ones. The issue of land
provision and the land lease system has greatly constrained the chances of micro,
small and medium enterprises who aspire to start up businesses (Eshetu &
Mammo, 2009).

According to Rolfe et al (2010) findings location is critical factor for sales and
income of small scale enterprises and hence entrepreneurs benefit from businesses
in formal residential areas. Logically, this finding stems from the higher per capita
income and demand density in developed urban areas. Demand density also
makes taxi ranks and train stations more lucrative. These spaces are limited and
thus a source of competitive advantage that cannot be copied or re-created.
Mbonyane & Ladzani (2011) found that small businesses select a site without first
thoroughly analyzing the suitability of location.

The same researcher found that most of the micro-enterprises are failing owing to
a lack of space provided by the government and the various shortcomings of the
small business owners regarding their businesses. Olawale &Garwe (2010) also

21
found that poor location has a negative impact of the performance of micro and
small enterprises.

Lack of sufficient marketing and high competition level:

The marketing problem is the main constraint for the growth of enterprises (Rahel
& Paul, 2010). Micro and small enterprises in Ethiopia faced various marketing
problems. There is lack of product diversity and as a result similar products are
over crowding the market. In addition to this certain micro and small enterprises
lack the skill to modify their products and they have lack of sufficient range of
product designs (Assegedech, 2004).

Ethiopian micro and small enterprises have different pricing problems such as
lack of costing knowledge, did not include over head costs, salary or wage of
family members involved in the production process are not considered, and do not
know the exact earning from sales (Assegedech, 2004).

Many MSEs plan to promote their products, however, their budget is mostly
limited. In addition to this, such MSEs have lack of awareness haw to compete in
the market. MSEs are less advantageous to compete in the market than large
companies since they have smaller economies of scale (Assegedech, 2004).

In terms of problems related to product diversity, the findings of Assegedech

(2004), Rahel and Paul (2010) and Eshetu and Mammo (2009) are similar.
According to Eshetu and Mammo (2009), majority of MSEs produce or give
services of similar products in a limited domestic market. Most of them do not
seek new possibilities and opportunities outside the local markets.

22
(Rahel and Paul 2010) also reported the presence of competition is the most
significant factor. This is because of the reason that enterprises in the same sector
sell identical products without any additional distinctiveness and innovative
activities. This led them to compete for the same demand.

Due to this, the local markets crowded with similar products or services and the
level of competition among local producers of goods and services is intense. As
result, the returns are fairly low. (Rahel and Paul 2010)

In addition, presence of illegal traders around their market place leads to

unbalanced competition and low demand for merchants who are legal. This results
in lack of demands which is another problem for the enterprises. (Rahel and Paul
2010)

The establishment of markets in residential areas also limits the demands. The
change in demand and being unable to modify their products with the demand is
the other marketing problem.

Because of such collective factors (stiff competition from local and foreign
products), most of the MSEs are claimed that they are at a disadvantage. There are
no sufficient institutional facilities that nurture the promotion, growth and
development of MSEs, Rahel and Paul (2010)

Marketing their products effectively as well as accessing and acquiring

information on business opportunities are the major bottlenecks that small and
micro entrepreneurs face all over the country. As a result, the design and quality
of products of MSEs are below standard. In addition, lack of marketing skills and

23
weak infrastructural facilities renders small businesses to be uncompetitive
(Commission on Legal Empowerment of the Poor, 2006).

Mbonyane &Ladzani, 2011, Olawale & Garwe, 2010 Bowen et al, 2009 also
found that lack of appropriate marketing practices are among the major
constraints that hinder the smooth function of MSEs.

Bowen et al (2009) found that there is fierce competition in the small business
sector which leads to price competition and small margin of profit. Olawale &
Garwe (2010) also show that high competition is among the major factors that
hinder the growth of micro and small enterprises. This is due to the reason that
most of MSEs tend to congregate in dense markets and overcrowded cities. Small
business owners do no longer find it easy in competing with their own goods
which is mostly perceived by consumers as low quality ones when compared with
those of the multinational companies.

Due to the aggressive competition small business enterprises are facing from
companies that operate with greater capital outlay, companies with better and
modern equipments for production, companies with better manpower and
companies with marketing capabilities have resulted to low level of business and
at times outright closure by small business owners (Etumeahu, 2009).

2.1. 4 Marketing Strategy

As cited by Gbolagade et,al (2013), There are numerous definitions of marketing

strategy in the literature and such definitions reflect different perspectives (Liet al,
2000). However, the consensus is that marketing strategy provides the avenue for
utilizing the resources of an organization in order to achieve its set goals and
24
objectives. Marketing strategy is define as in a given market area, the proper
allocation of resources to support enterprises to win competitive advantage. Goi
(2005) define marketing strategy as the set of the marketing tools that firms use to
pursue their marketing objectives in the target market; the view which was earlier
expressed by (Gronroos, 1999, and Osuagwu, 2006).Therefore, the function of
marketing strategy is to determine the nature, strength, direction, and interaction
between the marketing mix- elements and the environmental factors in a
particular situation. According to (owomoyela, et al, 2013), the aim of the
development of an organization‟s marketing strategy development is to establish,
build, defend and maintain its competitive advantage. Managerial judgment is
important in coping with environmental ambiguity and uncertainty in strategic
marketing. Lin (1993) as cited in Long-Yi and Ya – Huei,(2012) proposes that
marketing strategy can be divided into four ways to research that: (1) Dual-
oriented marketing strategy: using rational and emotional product name, easy to
remember, and pricing to take into account the cost of service and quality
orientation, psychological factors and competitors‟ prices. (2) Rational marketing
strategy: the use of functional demands of a rational position, consider after-sales
service, warranties, delivery and installation attached by the product factors. (3)
Emotional marketing strategy: the emotional appeal to locate, emphasis on
physical product shape, color design, the use of emotional product names, and so
on memory, attention to product packaging and labeling. (4) Maintenance
marketing strategy: consumers are more concerned about price and quality, it is
not suitable to use a lot of marketing techniques, manufacturers can improve
product packaging and labeling, give a simple name for remember, consider the
quality position and competitor pricing during pricing. Lin (1993) divides

25
marketing strategy into four parts that is dual-oriented, rational, emotional and
low involvement, different product types with different marketing strategy, so the
manufacturer’s marketing strategy can be divided into five parts which is the
choice of target market, product strategy, pricing strategy, channel strategy and
marketing strategy. He use a total of 29 questions to measure new product
marketing strategy and seven points Likert scale is used to measure. When the
industry lack of competition, the business performance would be better even when
companies are not entirely market-driven, the performance will have a more
excellent performance (Kohliet al., 1993). Previous studies have established
relationships between the marketing strategies and performance ( Owomoyelaet
al, 2013; Shoham, 2002; Theodosiou & Leonidou, 2003). Leonidou, Katsikeas
and Samiee (2002) propose a study in which a meta-analysis was also conducted
to evaluate the relationships between the marketing mix strategies and
performance.

2.1.4.1 Product Strategy

Kotler and Armstrong (2006) define a product as anything that can be offered to a
market for attention, acquisition, use, or consumption that might satisfy a want or
need. They further define a consumer product as the product bought by the final
consumer for personal consumption. Consumers buy products frequently, with
careful planning, and by comparing brands based on price, quality and style.
Borden, (1984) sees a product as about quality, design, features, brand name and
sizes. Mohammad et al, (2012) also say that product is the physical appearance of
the product, packaging, and labeling Information, which can also influence
whether consumers notice a product in-store, examine it, and purchase it. Past

26
researchers have clearly suggested that product influences have a significant
impact on business performance (KazemandHeijden, 2006; Kemppainen,
Vepsäläinen, andTinnilä, 2008; Ogunmokun and Esther, 2004; Owomoyelaet al,
2013), As cited by Gbolagade et,al (2013),

2.1.4.2 Pricing Strategy

Kotler (2007) defines price as a cost of producing, delivering and promoting the
product charged by the organization. Zeithaml (1988) is of the view that monetary
cost is one of the factors that influence consumer‟s perception of a product‟s
value. Price can be stated as the actual or rated value of a valuable product which
is up for exchange; some define it as amount of money paid for product (Kotleret
al, 2005). In the studies of Colpan,( 2006); Dooleet al., (2006) and Owomoyelaet
al, (2013) they establish significant relationship between price and business
performance. The price you set for your product or service plays a large role in its
marketability.

Pricing for products or services that are more commonly available in the market is
more elastic, meaning that unit sales will go up or down more responsively in
response to price changes (Jones, 2007). As cited by Gbolagade et,al (2013),

2.1.4.3 Promotion Strategy

Zeithamlet al. (1995) describes promotion as part of specific effort to encourage

customers to tell others about their services. According to Duncan (2005),
promotion is the key to the market exchange process that communicates with
present and potential stakeholders, and the general public. Every firm or store

27
must cast itself into the role of communicator and promoter. Hakansson (2005)
also reports that promotion appears as an issue of how to create an optimal mix of
marketing communication tools in order to get a product's message and brand
from the producer to the consumer. Borden, (1984) defines promotion as sales
promotion, advertising, personal selling, public relations and direct marketing.
Kotler, (2007) discovers that Promotions have become a critical factor in the
product marketing mix which consists of the specific blend of advertising,
personal selling, sales promotion, public relations and direct marketing tools that
the company uses to pursue its advertising and marketing objective. Previous
researches (Amine and Cavusgil, 2001; Francis and Collins-Dodd, 2004) have
established significant relationship between promotion and business performance.
As cited by Gbolagade et,al (2013),

2.1.4.4 Place Strategy

Jones, (2007) defines place as any way that the customer can obtain a product or
receive a service. Bowersox and Closs (1996) give distribution as another name
for place. According to them, it is the third element of the marketing mix, and it
encompasses all decisions and tools which relate to making products and services
available to customers. Kotler and Armstrong (2006), also define place or
distribution as a set of interdependent organizations involved in the process of
making a product available for use or consumption by consumers. Place strategy
calls for effective distribution of products among the marketing channels such as
the wholesalers or retailers (Berman, 1996). Owomoyela et al, (2013); Amine and
Cavusgil, {2001}; and McNaughton, (2002) agree that place has significant effect
on business performance.

28
2.1.4.5 Packaging Strategy

Packaging is a crucial component of the "marketing mix" for a product. It is the

"least expensive form of advertising" and is of particular importance at the point
of sale, as the package is the manufacturer's last chance to convince the customer
to purchase the product (Sajuyigbeet al, 2013). Packaging is a very important
marketing strategy to glamorize product in order to attract the consumer’s
attention. Sometimes packaging is so important that it cost more than the product
itself in order to lure the consumers to buy its (Sajuyigbeet al, 2013).Olayinka and
Aminu (2006) see packaging as all activities of designing and producing the
container or wrapper for a product. Kottler (2007) defines packaging as all
materials products used for the containment, protection, hard delivery and
presentation of goods. Packaging is the protecting products for distribution,
storage, sale and use, packaging also refers to the process of design evaluation
and production of packages. Packaging can be described as a coordinated system
of preparing goods for transport, warehousing information and sell. It is fully
integrated into government business, institutional, industry, and personal use
(Diana, 2005).Sajuyigbeet al, (2013) point out that packaging is one of the
inevitable communication tools that influence buying behavior and enhance
business performance. As cited by Gbolagade et,al (2013),

2.1.4.6 After Sales Service Strategy

After sales service involves a continuous interaction between the service provider
and the customer throughout the post-purchase product life cycle. At the time the
product is sold to the customer, this interaction is formalized by a mutually agreed

29
warranty or service contract. Urbaniak, (2001) defines after sales service as those
activities that enhance or facilitate the role and use of the product. (Asugman, et
al., 1997) also define after sales service as those activities in which a firm engages
after purchase of its product that minimize potential problems related to product
use, and maximize the value of the consumption experience. Past researchers
(Ruben, 2012; Saccani, et al., 2007;; Raddats, 2011; Goffin and New, 2001) agree
that after sales service is a marketing strategy that enhance and establish strong
and long relationship with customers, which in long run lead to customer
satisfaction, retention and profitability. As cited by Gbolagade et,al (2013),

2.1.5 Entrepreneurial Marketing in Small and Medium Sized Enterprises

Small and medium size enterprises don’t follow conventional methods in their
marketing practices and their functions are so specific (Stokes, 2000; hill et al,
2009). But sometimes they apply traditional methods in an innovative and
entrepreneurial manner to achieve their goals (Carson, 1993).

One of the major problems, which they face, is being in dynamic environment
(Moriarty et al., 2008). Therefore, their marketing decisions are occasionally,
discontinuous, non-structured, informal, and includes spontaneous reactions.
Moreover, marketing functions in these companies are highly dependent on
available recourses, life cycle of company and its product/service, personality,
knowledge and experience of owner manager and degree of Customer satisfaction
(Odwyer et al., 2009). Also social networks include people and other related
companies hav became the inherent characteristics of SME marketing (Zontanos
and Anderson, 2004).

30
Marketing literature confirms that small enterprises cannot benefit from
economies of scale in order to establish their core competencies on innovative
development of new product or service and the information needed for this
process is gathered from customer and market place (Odwyer et al., 2009).

In current environment, entrepreneurial orientations are the core of marketing

process in SMEs and are necessary for their success (Stokes and spring, 2000;
Zontanos and Anderson, 2004). Small businesses may not work as professional
marketing experts, but are always running for their survival and growth (Zontanos
and Anderson, 2004).

Kotler (2003:4-5) believes that entrepreneurial marketing is a new technique,

which is applicable in SMEs and divided it in three steps:

First entrepreneurial marketing. In this stage, most of entrepreneurs run their

businesses by individual efforts and rely on their cleverness and awareness the
most. They initially recognize an opportunity and adjust their experiences,
understanding and intuition to exploit it. In the second step, marketing techniques
are in the form of formulated marketing, Kotler continues that: “while an SME
achieves some success begins to formulate its marketing efforts and after a while
it has much formal technique as road map. But the lack of creativity and desire to
guerrilla marketing at this stage of growth companies is seen”. Now, brand and
product managers should come out from their office and live whit their customers
and create new way to deliver more value to them. In this stage, they need
entrepreneurial marketing. (Hills and Hultman, 2006).

31
According to Kotler, Entrepreneurial marketing is related to first development
phase of business where the level of entrepreneurship is high and the degree of
formalization of marketing practices is low. While, businesses move to growth
stage, the degree of formalization increases and more staff and procedure is
needed. However entrepreneurship is independent from organization growth and
may increase or decline during the time (Hills and Hultman, 2006). As cited by
Amir et al, (2011).

2.1.6 Marketing Mix in Small and Medium Enterprises

Marketing mix comprises are the core essence of marketing activities (Martin,
2009). Marketing researchers is always attributed the success of marketing
activities to the implementation of similar elements in the mix. The elements in
the marketing mix in a successful marketing activity have been traditionally
known as to be associated with the 4p’s (price, promotion, place, product) for
everyone (Kolter, 2003). Firms usually organize these elements according to the
known and tested patterns and step-by-step procedures and claim that the existing
designs inherent in these patterns are highly structured and systematic (Carson et
al, 1995).

However, Martin (2009) alluding to the points above and investigating empirical
cases, realized that small and medium enterprises lose their entrepreneurial spirit
by purely imitating the conventional marketing mix patterns. As mentioned
before, this is because these firms due to their nature face opportunities and
threats that cause them to use their own particular marketing practices (Hill et al,
2009). It is generally accepted that the characteristics and features of a small

32
enterprise influences its activities, techniques, and marketing experiences
(Zontanos and Anderson, 2004).

The tactics of using a different marketing mix are different from an entrepreneur
to another, regarding conventional processes such as product development,
pricing, place and promotion (Martin, 2009). Entrepreneurs prefer having direct
interactions and developing personal relationships with organizational
shareholders to practicing formal and conventional principles. Moreover, their
functional tactics are directed towards understanding the market instead of doing
formal research and are based on personal observations (Stokes and Nicholas,
2010). In fact, most manager owners of small and medium enterprises do not
determine their marketing mix based on the 4p’s, instead they prefer interactive
and conversational marketing practices (Carson, 2005).

2.1.7 The Marketing Mix of Micro-Enterprises

The survival of a company is directly related to the acceptance, on the part of the
consumers, of that which it offers to the market. McCarthy and Perreualt (1999, p.
43) mentioned that the marketing compound is the set of “controllable variables
that the company gathers to satisfy this target group” (consumers). These
controllable variables, also known as marketing mix, can be categorized as the
four Ps: product, price, promotion, and distribution points. The company should
generally offer a mix that offers solutions for the needs of its consumers. On the
other hand, the market should reciprocate the offer of solutions through payments
that ensure the sustainability of the company.

33
Also, as controllable variables, aside from the internal environment, there are the
raw material suppliers and services, competitors, and distributors, which will be
analyzed in conjunction with the analysis of the marketing mix. We decided to
also avoid macro environmental analysis, which can be categorized as an
uncontrollable variable, such as the economic, technological, and demographic
environment, among others. In this way, we maintain the focus in the marketing
mix. The first to be examined will be the product.

Product

In a marketing mix there is what is offered to the market in material form. Kotler
and Armstrong (2008) as the basis for the entire marketing compound, define: a
product as something that can be offered to a market for assessment, acquisition,
use or consumption and that may satisfy a desire or need. Products include
physical objects, services, events, people, places, organizations, ideas or a mixture
of all of these entities. (p. 200)

Micro-enterprises have characteristics and particularities that influence the

product offered, as in Table 1.

34
In this way, the micro-enterprises should look for alternatives in order to increase
sales through the increase of its production capacity and, consequently, their
productivity and scale economies. There are two crucial points to enable growth
in a sustained manner:

Obtaining productivity and scale economies means increasing one’s financial

return and decreasing costs and expenses;

Obtaining competitive differentiations through gradual innovations. Small

businesses must provide products or services to the market, despite their research
and development limitations. The innovations coming from small businesses can
represent a way to decentralize power—which is naturally centered on large
companies.

A good example is the strategy of an Excel spreadsheet, which is part of a

Windows package. This spreadsheet was previously known as Lotus and the
company that developed it, did not have the resources to market it internationally.
They decided then for patent registry and concession to Microsoft. In this way,
the product could be marketed globally, regardless of the size and resources of the
company concerned.

A solution for the lack of resources to be adopted by micro-enterprise is building

on provision of financial resources by entities such as the National Economic and
Social Development Bank, The Brazilian Development Bank (BNDES), as well
as the guidance of entities such as the Brazilian Service of Support for Micro- and
Small-Enterprises, SEBRAE. In addition, higher education institutions, through

35
their junicompanies and incubators, can become paths for innovating products and
services and for business management itself.

Below, the distribution channels will be analyzed with a more organic viewpoint.

Relationship Channels

From the perspective of a marketing mix, there are also distribution channels,
which initially may be defined as entities that provide the exchange between
manufacturers and consumers. However, in a more organic vision, these entities
have different and important roles in the process of exchange. According to
Kotler and Armstrong (2008): Generating a product or service and making them
available to buyers requires building relationships not only with customers but
also with suppliers and salesmen in the supply chain of the company. This
consists of supply chain partners “at levels above” and “levels below”.

On the level above are the suppliers, and the distribution channel represented by
wholesalers and retailers are on the level below. According to the number of
participants, there are the following levels:

Zero-level—characterized by direct marketing with the client. In this case, the

company can get better financial returns for not having distribution and marketing
expenses, but must absorb the transaction and operational costs;

Level one—there is the presence of retailers, which can be defined as specialized

agencies in trading and transactions that increase the reach of the company within
the consumer market;

36
Level two—there is the presence of wholesalers that buy in bulk and resell to
retailers and/or end customers. Generally, there is little possibility of operation by
micro-enterprises at this level, due to production limitation, except for
negotiations and specific contracts.

However, every company needs to have an integrated view of its business, as well
as what each entity aggregates in relation to the value perceived by consumers.

Distribution strategies can be categorized into intensive, selective, and exclusive:

Intensive distribution strategies imply strong distribution capability throughout

the market and with great geographical reach. For reason of their limitations,
micro-enterprises are unable to achieve this level of intensity;

The strategies of selective distribution indicate that the company may choose
certain dealers, according to their production limitations, as well as their access to
different categories of consumers;

Exclusive distribution strategies indicate that the micro businessman has chosen a
company category for the marketing of their produce, which gives them better
control and focus on their sales.
37
Companies in the area of food products, for example pizzerias, have bypassed
geographical limitations by means of outsourcing their deliveries. Another
important factor is the possibility of geographic dispersion. A good example is the
Giraffe’s, which has obtained considerable growth and is also present
internationally.

In recent times, logistics areas internal and external and physical distribution
have become one of the greatest objects of analysis. It is of no value having a
good product if it is not open to distribution or if there be any delay in delivery.
The solution for micro-enterprises is sound management through the creation of
indicators. If on the one hand, the introduction of management indicators, such as
the Balanced Score Card (BSC), can initially generate barriers, due to the
standardization of procedures and processes; it will allow the company to have a
more complete vision of the business, as well as, the relationship channels.

Following below are the tangible products pricing strategies.

Initial Pricing Concepts

Every company must charge for what it offers to the market; all consumers must
pay, and understand that they are getting something of a particular value. Thus,
Kotler and Armstrong (2008) noted that: In the strictest sense, price is the amount
you will charge for a product or service. More widely, the price is the sum of all
the values that consumers exchange for the benefits of getting or using a product
or service. Historically, the price has been the main factor that affects the buyer’s
choice. (p. 258)

38
The formation of the price for the final consumer is one of the hardest decisions in
the marketing compound, since it involves different variables that small business
people are sometimes not aware of. It can and must involve aspects related to
production and marketing costs, fixed and variable, and profit margin, i.e., should
be contextualized with the chain of values and corporate objectives of the
company. Supplementing with McCarthy and Perreualt (1999, p. 275): “price
objectives should flow and be adjusted to the company and their marketing goals.
It should be explicitly declared because they have a direct effect on price policies,
as well as the methods used for their determination”.

According to the strategic planning of a company, the strategies of pricing can be:

Elite or creaming method, in which the company offers to the market a product or
service at a high price, being understood that this has a high added value, and that
there is a consumer market interested and with sufficient income;

Floor or introduction, in which the company offers something at a low price,

considering that the product or service does not have sufficient attributes that lead
consumers to pay a higher price for it.

The selection of price strategies stems from several situations involving: the
categories of products and services offered, competition, suppliers, level of
competition and expectation of returns on initial investment and working capital.
In most cases, micro-enterprises offer a product or service at a competitive level,
concerned mainly with short-term return.

39
In sequence and terminating the analysis of the mix, the various form of
communication, information and promotion of their businesses, companies,
products, and services.

Promotion Tools for a Micro-enterprise

To inform and market their products and services, all companies must use a
composite of promotion.

According to Kotler and Armstrong (2008): Building good relationships with the
client requires more than just the develop of a good product, giving you a
competitive price and making it available to the target customers. Companies also
need to communicate their value propositions to customers. (p. 357) The
promotion compound is formed by long- and short-term incentives in order to
motivate consumers into buying products and services at that time, but also
aiming at managing the beginning and promoting the maintenance of the business
relationships. Long-term incentives may be advertising and public relations; and
short-term incentives can be categorized as sales promotion and personal selling.

Table 3

40
Micro-enterprises should combine the different actions in accordance with their
goals and objectives, as well as in accordance with their expectations and budget.
In general, the company must therefore generate long-term incentives, disclosing
their name and promoting their respective products and services. In addition,
short-term stimuli should be promoted in order to render sales and have the
consequent return on their investment. In the specific case of micro-enterprises, it
is natural for them to make greater use of short-term incentives because of their
need for financial return.

One option is the use of the internet to disseminate the company, as well as for
marketing and the sale of its products and services. Lodish, Morgan, and
Kallianpur (2002) recalled the importance and relevance of the web in business
enterprises and viral marketing.

Some companies can get free exposure by yielding part of their products and
services. It is natural for restaurants to give amenities in exchange for exposure in
newspapers and magazines. According to the methodology mentioned, some
research was carried out the by author together with Kuazaqui, Lisboa, and Silva
(2011), with the purpose of identifying the knowledge level of the management
tools as well as those related to marketing strategies.

2.1.8 The Concept of Performance

GEM, (2004) defined Performance as the act of performing; of doing something

successfully; using knowledge as distinguished from merely possessing it.
However, performance seems to be conceptualized, operationalised and measured
in different ways thus making cross-comparison difficult.

41
Cooper et al (1992) examined various factors which influence business
performance such as: as experience, education, occupation of parents, gender,
race, age, and entrepreneurial goals. While, Lerner and Hisrich (1997) conducted
a study on Israeli women entrepreneurs and categorized the factors that affect
their performance into five perspectives, that is, motivations and goals, social
learning theory (entrepreneurial socialization), network affiliation (contacts and
membership in organizations); human capital (level of education, skills) and
environmental influences (location, sectoral participation, and socio political
variables).

Thibault et al. (2002) suggest that factors influencing business performance could
be attributed to personal factors such as demographic variable and business
factors such as amount of financing, use of technology, age of business, operating
location, business structure and number of full-time employees as important
factors in examining the performance as small scale business operators.

The most comprehensive summary of factors influencing performance was noted

in a literature review by Theo, et, al. (2007) to include: individual characteristics,
parental influence, business motivation and goals, business strategies, goals and
motives, networking and entrepreneurial orientation. Others include
environmental factors.

2.1.9 Marketing Practices and Firm Performance

1Moloney, Fahy & McAleer (2005) define marketing as a business practice that
focuses on the importance of having a profound appreciation for the customer so
that the marketer can match or surpass the needs of the intended market better

42
than the competition and as a result provide the firm with a continual competitive
advantage in the market place. According to Arsalan, Naveed and Muhammad
(2011), it is indispensable for every business to conduct marketing practices.
Ghouri, Khan, Malik & Razzaq (2011) emphasize that executing a proper
marketing strategy adds excellence to a firm’s activities and strengthens the
competiveness and market share of the firm. Firm performance has been
established to directly depend on efficient marketing practices (Andres, Salinas &
Vallejo 2009). Kumar and Petersen (2005) established seven marketing strategies
that can maximize the profitability of a firm as well as prolife rate its
performance. Porter (1985) brought forth a generic strategy which explained that
for a business to maximize its performance, it should either strive to be a low-cost
producer in its industry or should differentiate its line of products/services from
those of other businesses. According to John and John (2006), businesses that use
the differentiation strategy should focus primarily on marketing as a means of
distinguishing their products and services from those of their competitors.

Therefore, maximizing business performance through the differentiation strategy

is directly linked to the marketing practices of the business.

43
2.2 Empirical Literature Reviews

Table 2.1 Vivid Presentation of the Empirical Literature

Author(s) Year Research title Methods Findings

Seyed. M. 2014 The Influence In this study, we The Results of this

et al of Export have considered the study show that all
Mixed influence of mixed factors of the mixed
Marketing marketing strategies marketing strategy
Strategy on on the food industry have the
Food Industry export performance meaningful effect
Export based on Lee and on export
Performance Griffith (2004)’s performance.
model. Meanwhile,
. production has
For gathering data highest effect and
we use a descriptive export channel has
method from lowest effect on the
correlation type. export
Required data has performance.
been gathered
through
questionnaire
among 105 superior
food export
producer companies
at 2009 and
analyzed by using
structural equation
technique
(confirmed factor

44
 analyze).

Masood 2013 Examine A survey The results of

et al, Impact ofquestionnaire has regression analysis
Marketing been used to collect showed that
Strategy the data from key performance is
Creativity on sales and marketing maximized when an
Organizational personnel of organization
business units in develops a creative
Performance service and strategy and
via Marketing manufacturing achieves effective
Strategy companies of implementation.
Implementation Managerial
Effectiveness: Pakistan. implications and
Empirical future research
Evidence from directions are also
Pakistani discussed.
Organizations.

45
Author(s) Year Research title Methods Findings

Aswani K. 2010 Determine the The main The study registered a

M, effects of instrument for positive relationship
different this research exist between product
marketing was self innovation as a
strategies on the administered marketing strategy
performance of questionnaire and firms
insurance were distributed performance at 0.41.
companies in This entails that for
Kenya. any insurance
company to diversify
effectively and
increase its market
share investment in
product innovation is
critical.

Gbolagade 2013 Investigates the The survey The results show that
et al impact of research design the independent
marketing method was variables (i.e Product,
strategy on used in this Promotion, Place,
business study which Price, and After sales
performance with involves using a service) were
special reference self-design significant joint
to the selected questionnaire. predictors of business
SMEs in Oluyole performance in term
local government The instrument of profitability,
area Ibadan, used in this market share, return
Nigeria. study is a close- on investment, and
ended expansion.(F(6, 97) =
questionnaire 14.040; R2 = 0.465;
that was P< .05).
designed by the
researchers.
Correlation
46
 coefficient and
multiple
regression
analysis were
used

Author(s) Year Question Methods Findings

Matti et. al 2010 Strategic Our data was The findings

Marketing and gathered by indicate that inside-
Its Effect on questionnaire in out capabilities are
Business 2002-2003, those most
covering small, positively effecting
Performance in medium and large to company
Three firms in business performance.
European and consumer
Engineering products and
Countries services in
Austria, Finland
and Germany.

N.B. Neneh 2011 Achieving A statistical The results reveal

& J.H. van optimal methodology was that all six selected
Zyl business used to test the business practices
performance relationships that were examined
through hypothesized in
business the research (Marketing
practices: model. practices, strategic
evidence from planning practices,
SMEs in human resource
selected areas management
in South practices, risk

47
 Africa. management
practices,
performance
management
practices and
teamwork
practices) have a
positive and
significant
relationship with
SME performance.

Weldegbriel 2012 Problems of In the study, both On the basis of the

M, Micro and qualitative and findings, the major
Small quantitative problems facing
Enterprises in research methods MSEs in Addis
Addis Ababa: were used. Ababa are lack
The Case of Primary data was business plan, lack
Kirkos, Kolfe, obtained using of formal and
and Yeka Sub questionnaires and informal
Cities. unstructured association, lack of
interviews. favorable business
Secondary data environment, high
was also collected cost and shortage of
from books, raw materials, lack
journals, past of proper
research works, institutional
official documents support, lack of
and the internet. proper marketing
Stratified sampling practice, and stiff
was used to select competition among
proportional MSEs in the same
number of samples business line and
from the study medium and large
area. companies.

48
Author(s) Year Research Methods Findings
title

Paluku k, 2014 Assessment A structured Study findings show

of Challenges questionnaire was that SME’s face
Facing Small administered to challenges to access
and Medium the participants of international
Enterprises the study. The marketing unaware of
towards tool was designed regulations and
International to assess standards, lack of
Marketing challenges facing financial support from
Standards: A SMEs towards the Government, poor
case study on international understanding of
Arusha marketing. The consumer’s needs and
region tool had 2 parts: services, lack of
Tanzania a) identification essential
and profile of entrepreneurial skills
respondents, b) and weak networking
assessment of structures to penetrate
challenges facing into international
SMEs towards marketing.
international
marketing.

Yiming et 2005 Investigates A pilot study was The results show that
al, the effects of first conducted in long-term differentiation
Marketing early 2000 via marketing strategy,
Strategy and semi-structured R&D as a percentage of
Business personal sales, and years in
Performance: interviews with business are positively
The Case of chief executives associated with a small

49
 Small Firms at ten SMEs in firm’s business
in China Tianjin, performance in China.

China.

Farshid 2012 The Influence The sample of the The result of this study
M. M and of Marketing firm was provided concluded that product
Amir. F, Strategy by The Industrial strategy, promotion
Elements on Ministry. The strategy, pricing strategy
Market Share data to evaluate a and place strategy are
of Firms. hypothesis were important elements to
obtained through increase the market share.
questionnaires
sent to the
managing
directors or sale
mangers of 95
sheets
manufacturing
firms.

Author(s) Year Research title Methods Findings

Raj 2011 Marketing mix The study is based The major finding
Kumar G. strategies of on primary data reveals that small
and small which has been manufacturers are not
Raghbir manufacturers collected by a using well versed with
S. of India: Punjab structured, non- the marketing mix
experience. disguised and pre- techniques and do not
tested use latest marketing
questionnaire. tool such as e-
marketing or web
50
 marketing. The
promotion of the
products by
advertising is not
prevalent among these
units.

Amir 2011 Developing As its research Results indicate that

M.K, et al Entrepreneurial framework, this the Entrepreneurial
Marketing Mix: study has used the Marketing Mix
Case Study of Quality – include 5Ps which
Entrepreneurial Exploratory element of Person is a
Food approach new element among
Enterprises in specifically case others. However it
Iran. study according to should be mentioned
Ghauri framework. that there is an
Data were collected entrepreneurial
from 17 approach in
entrepreneurial component of Price,
enterprises. Place, Product and
Different methods Promotions as well
including in-depth and some new
and semi-structured component have been
interviews, along added to the
with open questions conventional
from entrepreneurs marketing mix.
and marketing
managers were
employed in
gathering
information.

Content analysis
method also
inductive inference
used for data

51
Author(s) Year Research title Methods Findings

Michael 2013 Establishing The A questionnaire was The research

C. Cant, Challenges constructed and identified inflation
and Affecting South judgments sampling and interest rates,
Johannes African SMEs. was used to gather crime and
A. Wiid, the responses of 81 unemployment, low
SMEs. demand for products,
the wrong pricing
strategies
implemented and the
location of the
business to be the
major problems
experienced by SMEs.

Ebitu, E. 2015 Examined the The sample size of The findings

T, et al relationship the study was 150 highlighted in the
between and data was study were; there is a
marketing collected with the significant
problems and use of structured relationship between
performance of questionnaire. The the marketing
selected Small instrument was problems experienced
52
 and Medium content-validated, by SMEs and the
Scale Enterprises while the test-retest increase in their profit
in southern method was used to margin and sales
senatorial district confirm the volume.
of Cross River reliability.
State, Nigeria

2.3 Conceptual Framework of the Study

The arrows in the diagram show interactions between the variables. As depicted
in the diagram factors affecting business performance by product, price, place and
promotion factors.

The elements of marketing mix are product, price, place and promotion.

Product; is a set of tangible and in tangible attributes including packaging, price,

manufacturers prestige, retailers prestige and manufacturers and retailers services
(Stanton and Futrell, 1987.p.190).As it is mentioned by kotler (1994 ) anything
that can be supplied to the market is considered as a product. As cited by Emeye
B (2014).

Place; According to Perseault and McCarthy (2002), place means making goods
and services available in the right qualities and locations when customers want
them .To make products available in convenient locations, MSEs should gather
information on what distribution channels exist and consider the pros and cons of

53
developing one’s own channels versus relying on others(UNESCO,2004). As
cited by Emeye B (2014).

Promotion ; is any form of communication used to inform persuade and remind

people about on organizations individual goods, services, image, ideas,
community involvement, or impact on society. Therefore, it should be integrated
to the needs of particular market segments so that the target customers aware of
the availability of products and services in the market place (Evan and Berman,
1990, p.454). As cited by Emeye B (2014).

Price represents the value of a good or service for both seller and buyer (Evan
and Berman, 1990, p.554).it is only element of the mix that generates revenue the
others produce costs (koter 1994 cited in Tesfye.2011). As cited by Emeye B
(2014).

Figure 2.1.Conceptual Framework of the Factors that Affect Business

Performance

INDEPENDENT FACTORS DEPENDENT

FACTOR

Product
Business
Price Enterprises’
Performance
Promotion

Place 54
 3. METHODOLOGY

3.1 Research Design

The research design employed in this study is quantitative research design. Also,
this is a cross-sectional study which gathers data on a single point in time
throughout the entire study.

To achieve the research objective, a survey of enterprises has been carried out in
Gondar city. This research has tried to examine the relationship between
independent and dependent variables or assessing the impact of marketing
strategies as an independent variable on micro and small business enterprises
performance which is the dependent variable; and thus the research is
causal/explanatory in nature.

3.2 Population of the Study

The population of this study comprises micro and small business enterprises
operating at Gondar city. In the micro and small enterprises office report, there
are 334 micros and small business enterprises operating on manufacturing sector
( like, metal & wood work, textile & garment, leather & leather product, food
processing & beverage, agro-processing and hand crafting & ornament) has been
targeted.

55
3.3 Sampling Design

3.3.1. Sample Size Determination

The list of all micro and small business enterprises was retrieved from the micro
and small enterprises office at Gondar city and this was used as the sampling
frame for the quantitative study. For the quantitative study the researcher has
determined total sample size by using Yamane (1967) sample size formula.

Sample Size Formula

Where:
n = sample size
N = population size (the universe)
e = sampling error (usually .05 acceptable error)
2 = raised to the power of

n= 334/ (1+334(0.0025)

= 334/1+0.835

= 334/1.835

= 182

56
3.3.2. Sampling Technique

The researcher divides the entire target population into different subgroups
(business categories), as strata, and then randomly selects the final subjects
proportionally from the different strata (business categories).

Total sample size was proportionally allocated to base on the number of each
business categories micro and small business enterprises then the respondents was
selected from each business categories. The researcher has used proportionate
stratified random sampling techniques.

The researcher followed the method of proportionate stratified sampling under

which the sizes of the samples from the different strata has been kept
proportional to the sizes of the population in the strata. So based on this the
following numbers has been sampled from each stratum.

Table 3.1 Formulation of Stratum

Population sample selected

Stratum/business of the sample from each
No categories / stratum Weight size stratum

Metal and wood

work Engineering 54.19% × 182 =
1 Enterprises 181 54.19% 182 99

Textile & Garment 182 17.06% × 182 =

2 Enterprises 57 17.06% 11

57
 Leathers & 182
Leathers Products
3 Enterprises 6 1.80% 1.80% × 182 = 3

Food Processing 182

and Beverages 14.97% × 182 =
4 Enterprises 50 14.97% 27

Agro-Processing 182 11.08% × 182 =

5 Enterprises 37 11.08% 20

Traditional Hand 182

crafting &
Ornament 0.90% × 182 =
6 Enterprises 3 0.90% 22

Total 334 100% 182

Source: Micro and Small Enterprises Office /2008/

3.4. Data Source and Data Collection Procedure

The researcher has used primary data source and specifically questionnaire. It is
particularly self-administered method which was used in collecting the required
data from the respondents. In addition to this, the researcher has been collected
secondary data from books, articles, journals, and Internet to enrich and critically
analyze the subject under study.

58
The questionnaire has been passed out to the respondents at their business
categories. However prior to this, permission has been requested from the owner
of the enterprises and furthermore, the respondents have been informed about the
purpose of the study. Following the instructions on the instrument, the
questionnaire has been filled out and returned

3.5. Research Instrument and Measurement

The instrument consists of three parts. The first part contains general background
(demographic information) of respondents. The second part contains four facets
of marketing mix strategies while the third part is all about business performance.
Each of how the variable would be measured in this study is discussed as follows.

Measure of Marketing Mix Strategies and Overall Performance

I) Marketing Mix Strategies (the independent variables)

Marketing mix strategies (the independent variable being considered in this study.
To measure marketing mix strategies developed by researcher has been used. Four
facets of marketing strategies were asked. The four dimensions developed by the
researcher, namely product (7 items), price (7 items), promotion (6 items) and
place (7 items). These items has been rated on a five-point likert type scales
ranging from ‘1’ “Strongly Disagree.” to ‘5’ “Strongly Agree”. The items of
respective factors of marketing strategies were computed as average summated
score for the data analysis purpose.

59
II) Business Performance (the dependent variable)

The only dependent variable in this study is performance. To measure all over
business performance, a simple and understandable three item construct was
developed by the researcher. These items were rated on a five – point Lickert type
scales ranging from ‘1’ “Very Low” to “‘5’ Very High”. The item of respective
factors of all over business performance has been computed as average summated
score for the data analysis purpose.

3.6. Validity and Reliability of the Instrument

3.6.1. Validity Test

According to Kumar, (1996), in terms of measurement procedures, validity is the

ability of an instrument to measure what it is designed to measure. To further
strength the validity of the instrument, the researcher has used simple appropriate
English and Amharic language, which is easily understandable by the respondents
to facilitate respondent cooperation and to enhance respondents’ understanding.

3.6.2. Reliability Test

Reliability is one of the major criteria for evaluating research instruments.

Reliability measures the internal consistency of the model. In this research,
Cronbach’s alpha has been used to test the reliability of the measures.

The cronbach’s alpha for all variables shown in Table 3.2, the reliability for
product performance is 0.887, and price performance is 0.797, promotion 0.860,
place 0.852 and business performance 0.897 represent.

60
The result indicates that the cronbach alpha coefficients for five variables are
above 0.70. It is supported by Nually (1978) pointed out that the reliability above
0.60 is sufficient for basic research. Thus, the items used in measuring the
variable were acceptable.

Table 3.2 Reliability Measures Using Cronbach’s α for Tested Variable

Measures No. of items Cronbach's alpha

coefficient value

Product 7 0.887

Price 7 0.797

Promotion 6 0.860

Place 7 0.852

Business Performance 3 0.897

(Source: researcher survey, 2016)

3.7. Data Analysis Methods and Interpretation

After data is collected through a self-administered method, the already collected

data has been edited and analyzed using certain statistical tools (measures of
central tendency and dispersion) i.e. mean, and standard deviation to test the first
two research questions for to show the level of marketing mix strategies practice
and performance of the businesses. Moreover, to test the other research questions,
the researcher has been used correlation analysis and particularly it is Pearson
61
correlation has been used to detect whether each independent variable is related to
the dependant variable or not. Additionally, regression analysis and particularly it
is multiple regression analysis which was employed to show the effect of
independent variable on the dependent variable and which factors of marketing
mix strategies is more predictor of business performance. The above procedure
has been done by using SPSS version16.0 windows statistical software.

62
 4. DATA ANALYSIS, FINDINGS AND DISCUSSION
4.1. Introduction

This chapter is to highlight and discuss the results and the findings based on the
analysis done on the data collected from respondents. This chapter includes
demographic information of the respondents, results obtained from the descriptive
statistics for the dimensions of mean and standard deviation analysis and Pearson
correlation coefficient, multiple regression analysis of the variables.

4.2. Demographic Information of the Respondents

A total of 182 questionnaires were distributed, and 179 responses were returned.
The response rate was 98.3%. Due to the fact that 3 responses were not completed
correctly and thus are excluded from the analysis, a total of 179 valid responses
were used in the data analysis procedures.

The overall profile of the participating respondents’ demographic characteristics

is presented in Table 4.1, below. Among the 179 respondents who participated in
the survey, 141 respondents (89.6%) were male, and 38 (10.4%) respondents were
female. This finding indicates that males are mainly dominating the MSEs
manufacturing sector.

The result of age distributions in Table 4.1, below suggest that the greatest
numbers of the respondents (76.2%) are in from 20-25 years age group, followed
by under 20 years age (19.4%) and 4.4% of them aged above 25 years. As far as
the age of respondents is concerned, most respondents were the ages of 18 to 25
and they are 56 in number and constitute (31.3%) of the total participants,

63
88(49.2%) of the respondents are between in the ages of 26 to 35, 19(10.6%) of
the respondents are aged in between 36 to 45, and the age range above 45 years
contains 16(8.9%) out of the total respondents.

The marital status of the respondents in Table 4.1, shows that majority of the
respondents are unmarried which represent 47.5% that is about 85 respondents out
of 179 respondents. Meanwhile, 77 or 43.0% respondents are married. About 16
or 8.9% of the respondent are divorced and 1or 0.6% are others.With regard to
level of education, 41 (22.96%) of the participants are at diploma level, the larger
proportion which is 49 (26.3%) of the participants their Primary school, while 25
(14.1%) of the participants have made their 1st degree hold And above Secondary
school of48 (25.8%), Others participants have made their 15 (8.40%)

The result of business size in Table 4.1, below suggest that the greatest numbers
of the respondents (72.6%) are in their micro group, followed by small business
(27.4%).

Table 4.1, represents business categories respondents in this study. It shows that
a total of 99 or 55.3% respondents have worked metal and wood work, 22 or
12.2% of the respondents have been working Traditional Hand crafting &
Ornamental products; meanwhile, 22 or 12.3% of the respondents have been
working on agro processing, 27 or 15.1% of the respondent working food and
beverage business categories. About 11 or 6.2% of the respondents are working
textile and garment sector.

When the capital of the respondents is seen, majority of them 62 (34.6%) capital
are below 5,000 birr and 47 (26.3%) of the respondents capital between 5,001 to
64
10,000 birr while 30 (16.8%) and 19 (10.6%) of the respondents capital between
10,001 to 20,000 birr and Between 20,000 to 50,000 birr respectively, similarly
the remaining respondents which are 11 (6.1%) and 10 (5.6%) reported that their
capital is above 100,000 birr and between 50,001 to 100,000. the study also
showed is that 93 (52.0%) of the respondents have been working in the business
below 5 years, and 56 (31.3%) of the respondents have been working in the
business between 5 to 10 years , similarly 12 (6.7%) of the respondents have
been working in the business between 10 to 15 years, while 11 (6.1%) and 7
(3.9%) of the respondents have been working in the business between 15 to 20
years and above 20 years respectively .

2nd degree &

1 0.56
above

Education 1st degree 25 14.00

Level
Diploma 41 22.96

Secondary 48 25.8
school

Primary school 49 26.3

Others 15 8.40

Total 179 100.0

65
 Table 4.1 Profile of the Respondents

Demographic Categories Frequency Percentage

variable (%)

Male 141 89.6

Gender Female 38 10.4

Total 179 100.0

18 to 25 years 56 31.3

26 to 35 years 88 49.2
Age
36 to 45 years 19 10.6

Above 45 16 8.9
years
Total 179 100.0

Married 77 43.0

Unmarried 85 47.5
Marital

Status
Divorce 16 8.9

Others 1 .6

66
 Total 179 100.0

2nd degree &

1 0.56
above

1st degree 25 14.00

Diploma 41 22.96

Secondary
48 25.8
Education school

Level
Primary school 49 26.3

Others 15 8.40

Total 179 100.0

Micro 107 59.8

Small 27 15.5

Size of business Others 45 25.5

100.0
Total 179

67
 Metal and
99 55.3
wood

Leather
0 0.00
products

Food and
27 15.1
beverage

Agro-
20 11.2
Business categories processing

Traditional
Hand crafting 22 12.2
& Orna.

Traditions
Textile and 11 6.2
garment

Total 179 100.0

Below 5,000
62 34.6
birr

Amount of capital 5,001 to

47 26.3
10,000 birr

30 16.8
10,001 to

68
 20,000 birr

20,001 to
19 10.6
50,000 birr

50,001 to
10 5.6
100,000 birr

Above 100,000
11 6.1
birr

Total 179 100.0

Below 5 years 93 52.0

5 to 10 years 56 31.3

10 to 15 years 12 6.7
Years of
15 to 20 years 11 6.1
Experience

above 20 years 7 3.9

Total 179 100.0

(Source: Researcher's survey, 2016)

69
4.3. The Level of Marketing Strategies Practices of the MSEs

Research Questions one (Q1): What is the level of marketing mix strategies
practices at micro and small business manufacturing enterprise in the city of
Gondar?

In order to answer the above research questions the marketing mix strategies
practices level of in the micro and small manufacturing enterprises was measured
by assessing the level of perceived marketing strategies practices of
respondents/owners towards each factors of marketing mix strategies such as
product, price, promotion, and place.

The responses scores of respondents towards each factor of the marketing mix
strategies have been aggregated and relevant statistical values (i.e., mean and
standards deviations) for each facet have been computed and presented in Table
4.2.

In general, the average descriptive result / mean and standard deviation/ of the
independent variable marketing strategies is depicted below.

Table 4. 2 Descriptive statistics for predictor (independent) variables

Items/variables Mean S.D N

Product 2.3548 .87642 179

Price 2.3952 .74781 179

70
 Promotion 2.5205 .62527 179

Place 2.4549 .58657 179

Overall Marketing Strategies 2.4278 .49366 179

(Source: Researcher's survey, 2016)

Each independent variable items descriptive statistics (Mean and SD) result
attached at Appendix - I at the last page of this paper.

As can be seen in the above table, enterprise owners perception on marketing

strategies practices reported product, price, promotion, and place was low
marketing mix strategies practices with reference to Best (1977) on a five point
likert scale, responses ranging from 1 (very disagreed/ dissatisfied) through 3
(neutral) to 5 (very agreed/ satisfied) , the mean score from 1-1.8 is lowest, from
1.81-2.61 is low, from 2.62-3.41 is average/moderate, from 3.42-4.21 is
good/high, and from 4.22-5 is considered very good/ very high.

As depicted above in Table 4.2. The overall marketing strategies practices

(aggregated) value of enterprise owners responses showed a mean value of overall
marketing strategies practices is 2.4278, SD=.49366 on a 5-point scale.
According to Best (1977) on a five point Likert scale, the response’s mean score
ranging from 1.81-2.61 is low, and this result shows that the above stated

71
questions answer is the level of marketing strategies practices at the micro and
small manufacturing enterprises was low.

This finding is consistency with the findings of previous studies of Raj Kumar G,
and Raghbir S, (2011), which was undertook on marketing mix strategies of small
manufacturers of India: punjab experience. They found small manufacturing are
not using appropriate marketing mix strategies in the highly competitive
environment. Also, the finding consistency with Yibeltal N, (2014) Empirical
investigation on the application of marketing practices in Micro and Small
enterprises (MSEs). He found improper implementation of marketing concepts,
most MSEs were not effective in achieving their marketing objectives satisfactory
and are unable generate higher sales.

But this study’s finding is inconsistency from the findings of Abasilim A,(2015),
studied on Extent of application of marketing mix strategy by small and micro
scale enterprises in osun state Nigeria, He found that a high number of micro and
small scale business are involved in the application of marketing mix strategies.
Additionally, the finding not supported with N.B. Neneh & J.H. van Zyl (2008),
Achieving optimal business performance through business practices: evidence
from SMEs in selected areas in South Africa. He found that the selected SMEs
business marketing practice was high.

4.4. The Extent of Business Performance of the MSEs

Research Questions Two (Q2).What is the extent of micro and small

manufacturing enterprise performance at the city?

72
An attempt has been done to assess the extent of performance of micro and small
manufacturing enterprises. The response of randomly selected business owners at
the city towards business performance item displays how business owners
perceived performances. As depicted below in Table 4.3. The cumulative value of
three items of business performance responses showed a mean value of 2.3237,
SD=.77798 on a five -point scale.

Table 4.3 Descriptive Statistics of the business performance

Items N Mean S.D

Change in sales and profit over the past three

years are 179 2.0169 1.12232

Degree of customers’ satisfaction on your 179

2.7542 1.25238
product and services

Market share performance compared to 179

2.2011 1.10352
compotators in the same business sector

Business Performance 179 2.3237 .77798

(Source: Researcher survey, 2016)

Out of the three items, Degree of customers’ satisfaction on your product and
services receives the highest mean values (Mean=2.75, SD=1.252), followed by
Market share performance compared to compotators in the same business sector
(Mean=2.20, SD=1.103), While Change in sales and profit over the past three
years are receives the lowest mean values (Mean=2.016, SD=1.122). In general
73
this statistics indicates that the level of business performance is low and most of
the business owners are low performance of the perceived marketing strategies
practices.

As it is seen in Table 4.3. the mean value of business performance is 2.3237 with
reference to Best (1977) on a five point Likert scale, response’s mean score
ranging from 1.81-2.61 is low, and this brings research questions two answer
stating business performances of MSEs at the city was low level.

The finding consistency with Yibeltal N, (2014), Empirical investigation on the

application of marketing practices in Micro and Small enterprises (MSEs). He
found that up to 50 percent of the respondents in this study considered their
businesses performance to be deteriorating.

The finding not supported with N.B. Neneh & J.H. van Zyl (2008), Achieving
optimal business performance through business practices: evidence from SMEs in
selected areas in South Africa. He found that 49.3% of SMEs business
performance was an average.

4.5. Correlation of Marketing Strategies Factors and Performance

In this subsection, whether correlations of marketing strategies factors and

business performance were significantly correlated or not, have been assessed by
using Pearson movement correlation analysis. The summary of Pearson
movement correlation result of marketing strategies variables and performance is
depicted below.

74
Research Questions Three (Q 3): What is the correlation of Marketing
strategies factor and micro and small manufacturing enterprise performance in
the city?

In this subsection, correlation between marketing strategies factor and MSEs

manufacturing enterprise performance will be identified in terms of direction and
significance by using person movement correlation analysis. The summary of
person movement correlation result is depicted below.

Table 4.4 Pearson correlation result of marketing strategies and business

performance

Correlations

Marketing Business
Strategies Performance

Marketing Pearson Correlation 1 .586**

Strategies

Sig. (2-tailed) .000

N 179 179

Business Pearson Correlation 1

75
 Performance
Sig. (2-tailed)

N 179

**. Correlation is significant at the 0.01 level (2-tailed).

Marketing strategies has significantly correlated with business performance

The Pearson correlation result shown in the Table 4.4, revealed that marketing
strategies has a positive and significant correlation with business performance
with (r = .586, p=0.000). Marketing strategies factors is positively affect
association with performance and their association was significant as their p value
is < 0.01, thus the previously stated research questions answers stating marketing
strategies has significantly correlated with business performance.

This result was supported by Smile D, and Daniel O, (2014), who reported that
the Pearson’s correlation coefficient showed a significant positive relationship
between Marketing mix Strategies and the Performance of SMEs.

Also, this finding is consistent with a study conducted by Ebitu, et al (2015), they
found that there is a significant relationship between the marketing problems
experienced by SMEs and the increase in their profit margin and sales volume.
Furthermore the finding supported with N.B. Neneh & J.H. van Zyl (2008),
Achieving optimal business performance through business practices: evidence

76
from SMEs in selected areas in South Africa. He found that the correlation
between marketing mix practice and business performance showed a significant
positive relationship.

But this study’s finding is inconsistency from the findings of R.Gajanayake,

(2010), studied on the Impact of Marketing Strategies and Behavior of Small and
Medium Enterprises on their Business Growth, he found that the correlation
between the level of marketing strategies and the growth is very less and almost it
seems to be no correlation though there was a positive relationship between the
two factors.

4.6. The Effect of Marketing Mix Strategies on Business Performance

Preliminary analyses were performed to ensure no violation of the assumptions of

normality, linearity, multicolloniarity and homoscedasticity of the model before
analysis. The result shows that there is no assumption problem in this study. Each
assumption of the model result attached at Appendix - II at the last page of this
paper. After having confirmed the model for its fitness towards the assumptions
of linearity, normality, multicollinearity, and homoscedasticity the stated
hypothesis “marketing mix strategies has significant effect on business
performance” have been answered.

4.6.1 The Effect of marketing mix strategies factor on business performance

In this subsection, whether each factor marketing strategies has significantly

effect on business performance or not, have been assessed by using multiple
regression coefficient analysis. The summary of multiple regression coefficient
result of each independent variable on performance is depicted below.
77
 Research Questions Four (Q4): Which factor of marketing mix strategies most
affects micro and small manufacturing enterprise performance?

In order to answer the above research question, multiple regressions was used to
identify the dominant factor among the four factors of marketing strategies that
has a stronger impact on business performance. As the result of multiple
regressions in Table 4.5 showed, product by standardized beta coefficients value
of .419 significant at .000 is found to be the most important factor of marketing
strategies that affected MSEs performance. In other ways it answers the research
question “Which factor of marketing strategies most affects MSEs performance?”
so that with a Beta-value of .419, product reaches statistical significance at the
0.000 level, and is the best predictor of performance followed by price with a
Beta-value of .419 sig. at 0.000 and promotion with a Beta-value of .237 sig. at
0.004.

Table 4.5 Multiple Regression Coefficients (Marketing Strategies on

Performance)

Unstandardized Standardized
Coefficients Coefficients

Model B Std. Error Beta t Sig.

1 (Constant) .235 .259 .909 .038

78
 Product .419 .068 .472 6.124 .000

Price .125 .083 .120 1.502 .135

Promotion .237 .082 .190 2.896 .004

Place .084 .094 .063 .892 .374

a. Dependent Variable: Business Performance

Strategies with product has significant effect on performance of MSEs

The multiple regression coefficient result shown in the Table 4.5, revealed that
strategies with product dimension of marketing strategies has a positive and
significant effect on performance with (beta = .419, p=0.000). Previously stated
research questions answer is product of marketing strategies factor has
significance effect on MSEs performance.

This result was supported by Gbolagade et.al (2013), who reported that product
has a significant positive effect on the business performance. Additionally, the
finding consistency with Yibeltal N, (2014). He found that product was
significance effect on marketing objectives.

79
Strategies with price has significant effect on performance of MSEs

In order to answer whether there is a significant effect between price and

performance, the research questions is analyzed through the multiple regression
coefficient; as Table 4.5 shows price is insignificant and positive effect on
performance, since the significant level of their effect is > 0.05 where (beta =
.125, p=.135). Therefore, price is found to be insignificantly effect on
performance and the formerly stated research question answer is price of
marketing mix strategies factor has no significance effect on business
performance is answered.

This finding does not support other studies such as, Gbolagade et.al (2013), as
they found price has significance effect on business performance. Also, this
finding is inconsistent with a researcher done by Yibeltal N, (2014), who showed
that price has a significant effect on marketing objectives.

Strategies with promotion has significant effect on performance

To answer the above research questions, the multiple regression coefficient was
used and the result in Table 4.5 showed that promotion is positively and
significantly effect on performance (beta = .237, p =.004). The formerly stated
research questions promotion of marketing strategies factor has significance effect
on business performance at city is answered.

This result supported the findings of Yibeltal N, (2014) who showed that
promotion has a significant effect on marketing objectives.

80
But this study’s finding is differing from Gbolagade et.al (2013), as they founded
that promotion was statistically insignificant and negatively effect on business
performance.

Strategies with place has significant effect on performance

In order to test whether there is a significant effect between performance and

place , the research questions is analyzed through the multiple regression
coefficient; as Table 4.5, shows place has a insignificant positive effect on
performance, since the significant level of their effect is > 0.05 where (beta
=.084, p =.374). Therefore, place is found to be insignificantly effect on
performance and bearing in mind that the formerly stated research questions
saying place of marketing strategies factor has no significance effect on business
performance at city is answered.

This result was supported by Gbolagade et.al (2013), which showed that place has
an insignificant positive effect on business performance.

But, this study’s result was not in support with the result of Yibeltal N, (2014); in
the study on Empirical investigation on the application of marketing practices in
Micro and Small enterprises (MSEs) as he found that place was significant effect
on marketing objectives.

In general, the coefficient values show, the change in performance with a unit
change in a predictor variable value, when all the other predictor variables are
held constant. When the coefficient value for the variable is analyzed, ‘product"
(as it most effect micro and small manufacturing enterprises performance) we can

81
say that there is an increase of .419 in the business performance of an MSEs for
every unit increase in the product of the MSEs, keeping all the other variables
constant. And based on the finding the multiple regression equation would be:-

Table 4.6, summarizes the overall beta value for variables in the marketing mix
strategies dimensions. The beta value for product is (beta value = .419, P value <
0.01), price is (beta value = .125, P value > 0.05), promotion is (beta value = .237,
P value < 0.05), and place is (beta value = .084, P value > 0.05).

However, product marketing mix strategies shows the highest beta vale and the
most significant compared to the other marketing strategies variables (beta = .419,
p .000). Thus, a product marketing strategy has the highest effect on business
performance.

This means that product marketing strategies is the dominant factor influencing
the micro and small manufacturing enterprises performance at the city of Gondar.

Hence, based on the finding the multiple regression equation can be stated as
follow:

BP=a+β1×1+β2×2+β3×3+β4×4+e

Where: - BP= Dependent Variable: business performance

a = constant

β1 = beta coefficient for the first variable

×1 = the first variable

82
 β2 = beta coefficient for the second variable

×2 = the second variable…

e = error

BP = .419 Pro +.125 Pri +.237 Prom +.084 Pla

(Where BP = business performance, Pro = product, Pri = price, Prom =

promotion, Pla = place)

Table 4.6 Model Summary (Marketing Strategies)

Model Summary

Change Statistics
Std.
Error of
R Adjusted the R Square F Sig. F
Model R Square R Square Estimate Change Change df1 df2 Change

1 .614a .377 .363 .62102 .377 26.338 4 174 .000

a. Predictors: (Constant), Product, Price, Promotion, Place

The regression analysis (Model Summary) in Table 4.6 shows the value of R
which represents 0.614 (61.4%) of the four facets of the independent variable,
marketing strategies; namely product, price, promotion, place consideration.

83
Additionally, R square and adjusted R square value of the multiple regressions is
given by 0.377 and 0.363, respectively. This is interpreted as 36.3% of variance in
performance is explained by marketing strategies factors, while 63.7% of
variation in performance is explained by other variables not considered in this
study. The F statistic of 26.338 at 4 and 174 degrees of freedom is statistically
significant at 99% confidence level; which implies the variation in performance
that is explained by marketing strategies factors expressed by adjusted R square is
statistically significant.

84
 5. CONCLUSION, RECOMMENDATION AND FUTURE
RESEARCH DIRECTION
5.1. Conclusion

Based on the findings of this study, the following conclusions are drawn.

To determine and assess the business performance level with the marketing
strategies practiced by MSEs manufacturing enterprises is not easy but not
impossible. The results can be very helpful in improve the level performance for
MSEs manufacturing enterprise to leverage or enhance the product and services
provided.

The study’s aim was to assess the impact of marketing mix strategies practice on
business performance at Gondar city. The conclusion of this paper based on the
objective of the study is as follows,

Based on the descriptive statistic found in the survey, the level of MSEs overall
marketing mix strategies practices and business performance shown low level at
Gondar city.

The level of MSEs performance based on the descriptive statistics is an indication

that performances of the MSEs’ in the city is observed which means the finding
by itself highlights the problem of MSEs low performance still exists in the city of
Gondar.

This research examined the relationship between marketing mix strategies and
MSEs performance at Gondar city administration. The finding showed that there

85
is significant positive relationship between marketing mix strategies and MSEs
performance.

The different facets of marketing mix strategies have a significant effect on MSEs
performance. Thus they have effect on MSEs performance in this particular study.
Four facets (product, price, promotion and place) of marketing strategies factors
are significantly and positively effect on MSEs performance, except price and
place marketing mix strategies factors.

5.2. Recommendation

Based on the findings and conclusions of the study, the researcher forwards the
following Recommendations to the micro and small enterprises, micro and small
enterprise coordination office, policy makers and suggestion for other researchers.

 The level of marketing mix strategies practice at Gondar city

administration is low due to improper implementation of marketing
concepts, most MSEs were not effective in achieving their performance
objectives satisfactory and are unable generate higher sales. MSEs should
enhance their marketing skills through proper marketing training and
experience sharing with other MSEs, and medium and large scale
enterprises.

 Perception of owners with the marketing mix strategies dimension at

Gondar city indicate that marketing mix strategies in this study has
significant and positive effect on micro and small manufacturing
enterprises performance. Hence, the micro and small enterprises should

86
 pay due attention to it to avert low performance by improving the
following marketing strategies dimension.

 In terms of product aspects of marketing strategies dimension has

significant effect on micro and small manufacturing enterprises
performance, it is recommended that enterprises owners should Provide
product with high quality, improved features, durable, better design,
acceptable standard size and colour as per the needs of the customers and
diversify and modify existing product.

 The owners perception of promotion has a positive and significant effect

on micro and small manufacturing enterprises performance, to improve
this factor the enterprises owners should apply promotional tools like,
electronics media, board, business cards and brochures, trade shows and
exhibition, door-to-door/word of mouth, banners and adopt modern
mobiles/sms/, create website of the business and create social media /face
book/ technologies.

 Furthermore, price dimension was considered as one of the marketing mix

strategies factors Positive effect on micro and small manufacturing
enterprises performance, to improve this factor enterprises owners should
apply different pricing strategies like offered lower price than
compotators/ large manufacturing, offered credit payment and discounts
and set prices on the basis of costs of producing and setting prices based
on what the market is prepared to pay.

87
  Finally, it is recommended on place marketing strategies dimension, the
enterprises should select appropriate business location and business Sites
should be reached easily and convenient to customers.

 Generally, the study recommends that holistic and effective strategies

stated above reverse the problem should urgently be developed and
implemented. Responding to this situation requires strong commitment
and strategic leadership and this study can guide the concerned body and
MSEs support mechanism to tailor their MSEs training programmers so as
to help MSEs owners/managers to acquire the necessary skills to properly
implement these four marketing mix strategies practices, which will
enable the MSEs to achieve optimal performance.

5.3. Future Research Direction

 Future research should focus on the perception of marketing strategies

practices from other business categories sectors (such as construction,
urban agriculture, services, trades, etc.).

 Further study is suggested to make a comparative study to investigate

whether there are any differences in marketing strategies practices and
business performance between manufacturing and other sectors.

 This study is conducted only on sector particularly MSEs manufacturing;

future research should broaden its scope other business sectors.

Future research could include other dimension of marketing strategies practice

that may be important predictor of business performance.

88
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Appendix – I Descriptive Statistics of the Independent Variables

Items Mean S.D

Descriptive results of Strategies with Product 2.3548 .87642

(N=179)
Provide product with high quality, improved features,
durable, better design, acceptable standard size and 2.8380 1.29888
colour as per the needs of the customers.

New product development based on the market/customer

2.2346 1.17115
need

Products are available and accessible the desired market 2.5866 1.16938

Have information product demand forecasting 2.2011 1.16783

Branded products are demanded by most of customers 2.1573 1.22957

Service along with products is more important to high 2.2011 1.10352

light the product.

Product diversity and modify existing product will have

more chances to improve the performance of the 2.2626 1.11340
business.

Descriptive results of Strategies with Price (N=179) 2.3952 .74781

100
The price lower than that offered by the compotators/
2.1006 1.02275
large manufacturing

The credit payment are offered to attract customers 2.3464 1.06667

Have skills and knowledge to set competitive price 3.0838 1.39369

Offer discounts to their customers on a regular basis 2.4916 1.12863

Lack of costing skills as well as competition to set

2.2067 1.20241
competitive prices

Set prices on the basis of costs of producing plus a fixed 2.1292 1.29760
margin for profit

Setting prices based on what the market is prepared to

2.4078 1.36413
pay

7Descriptive results of Strategies with Promotion

2.5205 .62527
(N=179)

Advertizing by Decorate name of the store 3.2793 .84811

Advertising in TV channels, radio broadcasting, local

newspaper, journals, board, business cards and brochures 2.0447 1.13088

101
Have experience to promote their product and service 2.5698 1.28053

Inability to effectively promote products 2.4916 1.10346

Promotion through mobiles/sms/ and internet/face

2.0056 1.18747
book/is mere important now a day in this place

Trade shows and exhibition have the highest impact the

2.7318 1.35979
business performance

Descriptive results of Strategies with Place (N=179) 2.4549 .58657

Products available at the right place 3.1397 1.56777

Have appropriate business location 1.6425 1.06823

Business Sites are located in areas that can be reached

2.0838 1.38561
easily and convenient to customers

Lack of information where the best market areas are

2.4972 1.15814
located

Premises with reasonable price/rent 3.0447 1.21702

The location of the business is more important to the

performance and development of the business 2.7542 1.23885

102
Transportation is a big factor to make the product
2.0223 1.09110
available all the time

Items Mean S.D

Descriptive results of Business Performance (N=179) 2.3237 .77798

Change in sales and profit over the past three years are 2.0169 1.12232

Degree of customers’ satisfaction on your product and 2.7542 1.25238

services

Market share performance compared to compotators in

the same business sector 2.2011 1.10352

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Appendix – II Assumptions of Liner Multiple Regression Model

Normality: Regression assumes that variables have normal

distributions. Non-normally distributed variables can distort relationships and
significance tests. There are several pieces of information that are useful to
the researcher in testing this assumption like data curve : as we can see from
the visual inspection of data curve plotted in figure 1 portrayed in appendix II
, the graph labeled display normal curve and it shows that the variables have
normal distributions. Thus normality assumption is said to be fulfilled.

Figure 1 Normality curve

Linearity: Standard multiple regressions can only accurately estimate the

relationship between dependent and independent variables if the relationships
are linear in nature. That is to say the mean values of the outcome variable for
each increment of the predictor(s) lie along a straight line.

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To check whether marketing strategies facets /which are the independent
variables/ are directly correlated with micro and small enterprise performance/
which is the dependent variable/ residual plot against the fitted values were
plotted. (Montgomery et al., 2002) advocated that the preferable method of
detection of linearity is examination of residual plots (plots of the
standardized residuals as a function of standardized predicted values, readily
available in most statistical software). Thus from the figure 2 depicted in
appendix II , it could be easily understood that the observations are lie on the
straight line of the graph or no observations far from the line and as a result
this reflects that the linearity assumption is fully met.

Figure 2 linearity graph

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Multicollinearity: There should be no perfect linear relationship between two
or more of the predictors. So, the predictor variables should not correlate too
highly. Multicollinearity exists when there is a strong correlation between two
or more predictors in a regression model. If there is collinearity between
predictors it becomes impossible to obtain unique estimates of the regression
coefficients.

One way of identifying multicollinearity is to scan a correlation matrix of all

of the predictor variables and see if any correlate very highly. According to
Hair et al., (2003) correlation of 0.7 and above can be an indicator of possible
multicollinearity between independent variables. As we can see from table 1
the Pearson correlation coefficient of this study is 0.614 which is less than that
of 0.7 it shows that there is no collinearity problem.

Table 1 Person Correlation Coefficient Matrixes

Correlations

Product Price Promotion Place

Product Pearson
1 .627** -.018 .270**
Correlation

Sig. (2-tailed) .000 .814 .000

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 N 179 179 179

Price Pearson
1 .017 .369**
Correlation

Sig. (2-tailed) .817 .000

N 179 179

Promotion Pearson
1 .388**
Correlation

Sig. (2-tailed) .000

N 179

Place Pearson
1
Correlation

Sig. (2-tailed)

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 **. Correlation is significant at the 0.01 level (2-
tailed).

The other method of testing collinearity problem is the variance inflation factor
(VIF). The VIF indicates whether a predictor has a strong linear relationship with
the other predictor(s). although there are no hard and fast rules about what value
of the VIF should cause concern, Myers (1990) suggests that a value of less than
10 is a good value and as we can also see from table 3 the VIF value is less than
10 and again it assures that multicollinearity assumption is satisfied.

Table 3 Collinearity Diagnostics

Marketing Strategies’ Facets Coefficients a

Model Collinearity Statistics

Tolerance VIF

Product .603 1.660

Price .560 1.785

Promotion .828 1.208

Place .715 1.399

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a. Dependent Variable: business performance

Homoscedasticity: At each level of the predictor variable(s), the variance of

the residual terms should be constant. This just means that the residuals at
each level of the predictor (s) should have the same variance
(homoscedasticity); when the variances are very unequal there is said to be
heteroscedasticity.

According Tabachnick and Fidell (1996) slight heteroscedasticity has little

effect on significance tests; however, when heteroscedasticity is marked it can
lead to serious distortion of findings and seriously weaken the analysis.

This assumption can be checked by visual examination of a plot of the

standardized residuals (the errors) by the regression standardized predicted
value. Most modern statistical packages include this as an option. Figure 3
show a plot of the study and as it can be observed from the figure the plot of
fitted value against the standardized residual are vary without any systematic
pattern. The error terms are varied constantly without any increment or
decrement. Thus this nonsystematic or random pattern indicates the presence
of homoscedasticity and the assumption is kept.

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Figure 3 Homoscedasticity test

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Appendix – III English Version of the Questionnaire

University of Gondar

College of Business and Economics

Department Of Marketing Management

Questionnaire: on “Assessing the Impact of marketing Strategies Practices on

the Micro and Small Business Enterprise Performance”.

Dear respondent,

Attached herewith is a questionnaire designed to collect data which will be used

for the preparation of a thesis on “The Impact of Marketing Strategies Practices
on the Micro and Small Business Enterprise Performance, In Case Of Gondar
City Administration”, as required for the partial fulfillment of Master degree in
Marketing Management. In an attempt to meet the aforementioned objective, I
kindly request you to spare your valuable time to complete the questionnaire. As
the research is mainly for academic purpose, I assure you that all responses will
be treated as confidential and broad findings of the study without the name of the
respondent and your cooperation and prompt response will be highly appreciated.

Thank you Kind regards,

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Part One: Personal Data (Please x)

1. Sex: Male Female

2. Age: 18-25 years 26-35 years 36-45 years > 45 years

3. Marital Status: Married UN Married Divorced Others

4. Educational qualification: Masters & above Bachelors Degree

Diploma

Secondary complete Primary complete other

5. Size of your Business: Micro Small Others

6. Business Categories’: Metal & wood work Garment Leather

Food & Beverage

Agro- Processing Traditional

7. Amount of Capital፡? < Birr 5,000 Birr 5,001-10,000 Birr 10,001-

20,000 Birr 20,001-50,000 Birr 50,001-100,000 Over Birr 100,000

8. Years of Experience:: < 5 Years 5-10 Years 10-15 Years 15-

20 Years > 20 years

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Part Two: Marketing Strategies Practices (Please mark “X”)

Here under please rank the determinant factors of business performance using five
Likret scales ranging from “strongly disagree” to “strongly agree”.

Strongly Agree
Disagree
Disagree
Strongly

Neutral

Agree
S/N Variables/Factors

Factor 1: Product 1 2 3 4 5

1 Provide product with high

quality, improved features,
durable, better design,
acceptable standard size and
colour as per the needs of the
customers.

2 New product development

based on the market/customer
need

3 Products are available and

accessible the desired market

4 Have information product

demand forecasting

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5 Branded products are
demanded by most of
customers

6 Service along with products

is more important to high
light the product.

7 Product diversity and modify

existing product will have
more chances to improve the
performance of the business.

Factor 2: Price 1 2 3 4 5

8 The price lower than that

offered by the compotators/
large manufacturing

9 The credit payment are

offered to attract customers

10 Have skills and knowledge to

set competitive price

11 Offer discounts to their

customers on a regular basis

12 Lack of costing skills as well

as competition to set

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 competitive prices

13 Set prices on the basis of

costs of producing plus a
fixed margin for profit

14 Setting prices based on what

the market is prepared to pay

Factor 3:Promotion 1 2 3 4 5

15 Advertizing by Decorate
name of the store

16 Advertising in TV channels,
radio broadcasting, local
newspaper, journals, board,
business cards and brochures

17 Have experience to promote

their product and service

18 Inability to effectively
promote products

19 Promotion through
mobiles/sms/ and
internet/face book/is mere
important now a day in this
place

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20 Trade shows and exhibition
have the highest impact the
business performance

Factor 4: Place/Distribution 1 2 3 4 5

21 Products available at the right

place

22 Have appropriate business

location

23 Business Sites are located in

areas that can be reached
easily and convenient to
customers

24 Lack of information where

the best market areas are
located

25 Premises with reasonable

price/rent

26 The location of the business

is more important to the
performance and
development of the business

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 27 Transportation is a big factor
to make the product available
all the time

Part Three: - Business Performance (Please mark “X”)

Here under please rank the determinant factors of business performance using five
Lickert scales ranging from “Lowest” to “Highest”.

Medium

Highest
Lowest

High
Low
S/N Variables/Factors

Factor 1: Business Performance 1 2 3 4 5

28 Change in sales and profit over the

past three years are

29 Degree of customers’ satisfaction on

your product and services

30 Market share performance compared

to compotators in the same business
sector

Thank you for your cooperation!!

117