SMALLER firms facing deep cuts in their marketing budgets may not be any worse off than their larger counterparts with relatively more to spend.
Professor John Quelch of Harvard Business School believes that the ability of small- and medium-sized enterprises (SMEs) to get close to customers may give them a key edge during the current downturn.
The Lincoln Filene Professor of Business Administration told The Straits Times after a presentation to marketing professionals at the Fairmont Hotel here on Monday that consumers tended to patronise local businesses more during recessions - which augurs well for Singapore's SMEs.
'When times are good, people tend to think global - but when times are tough, people think local,' he said.
'During a downturn, consumers typically become more focused on their families, friends, neighbourhood and their community.'
SMEs, which often have good relationships with their local community, have the flexibility to react quickly to the needs of customers.
'SMEs know their markets better, and often have established a lot of good local one-on-one relationships with consumers,' said Prof Quelch, who is well known for his research on global marketing and branding.
And customers, he said, are more inclined to stay loyal to firms with which they have strong relationships. 'Just think of retail stores. Consumers will want to make sure that...the SME is given a shot at staying in business, so they might continue to shop there.'
A key challenge - especially for businesses selling discretionary items - is that the firm must be committed to coax clients 'over the finish line' with good customer service.
If the customer feels fearful, or is lacking confidence, he is going to hold back. And, if the consumer holds back, then he may go through the motions of shopping around for a product, but he may not ever make that final commitment, Prof Quelch explained.
'And that is where it's very important for the salesmanship of the marketer to come into play.'
Here, SMEs also have to come into their own by being able to provide more personalised services relevant to their customers during the sales process.
For example, they can offer an extended warranty, or free trial periods, for a new product or service. And in a tightening credit environment, SMEs can offer more flexible payment options.
'Perhaps even split a very large business contract into phases, so the customer is committing initially to a much smaller phase one, than to have the whole project that might be very much larger in terms of the financial commitment,' said Prof Quelch.
'So there are many ways in which business-to-business and consumer marketers in the SME territory can imaginatively help customers over the finish line to make the purchase.'
