This report analysis Entrepreneurial Marketing (EM), which is a term to describe the interface between entrepreneurship and marketing by locating its relevance and appropriateness in broader academic literature. It studies the evolution of the term, along with its key features and some frameworks. The report also analyzes the entrepreneurial venture, i.e. Durham Distillery, which is a small business established in 2014 in Durham. The report derives the key marketing challenges and opportunities from analysis of micro and macro environments of the selected enterprise.
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An entrepreneur refers to an individual who commences activities or processes that lead to forming a new business (Barrett & Mayson, 2008). The term ‘entrepreneur’ was first discussed in economic theory by ‘Richard Cantillon’ in 1755, who explained it as a “risk-taking entity” (Lall & Sahai, 2008, pp. 6). Likewise, ‘Entrepreneurship’ can be explained as the process of generating new ideas and turning opportunity them into opportunities (Delmar & Wennberg, 2010). Entrepreneurship has become a widely recognized and term in both academic literature and industry. According to the Organization for Economic Cooperation and Development (OECD) (2018), in almost all OECD countries, the number of new enterprises formed continued to increase in 2018. Interestingly, Small and Medium-Sized Enterprises (SMEs) account for 50% of revenue generated by the UK’s private sector (National Federation of Self Employed & Small Businesses, 2019). Nevertheless, marketing is a challenging area for both entrepreneurs and SMEs So, Entrepreneurial marketing (EM) is a term used to describe marketing activities conducted by entrepreneurial businesses to launch their new products and services (Nijssen, 2017). EM is an interface between marketing and entrepreneurship to establish a link of target customers with the entrepreneurial business (Kurgan, Bağıran & Maral, 2011. Even though the concept of EM is particularly applied on SMEs, it is applicable to both small and large businesses (Elaine & Elaneor, 2001).
The report aims to examine and evaluate the role of marketing within an entrepreneurial setting. It analyses the case of Durham Distillery, UK to identify the challenges and opportunities for the enterprise. The analysis is divided into four parts. The first part conducts an analysis of existing literature and frameworks of EM. The second part introduces the Durham Distillery and sheds light on its branding and products. The third part studies the current marketing activities in the micro and macro environments of the organization to pinpoint its’ strategic challenges and opportunities. Lastly, conclusions have been stated, and recommendations have been drawn for the Durham Distillery.
In the 1980s and 1990s, the scholars of marketing in the US and Europe debated on the interface between entrepreneurship and marketing (Hills et al., 2010). Hills (1984) explored the concerns, reactions, and responses of venture capitalists towards entrepreneurial marketing. It was found that venture capitalists considered marketing as a pivotal pillar regarding the success of a new venture. They believed that effective marketing research and management reduced the chances of failure of new business by 60%. Moreover, they also recognized the unique challenges faced by new businesses like lack of sufficient resources. According to Hills, Hultman and Miles (2008), this study was a milestone in the evolution of entrepreneurial marketing. Nevertheless, the authors explain that 1980s and start of the 1990s can be considered as the ‘nascent stage’ of EM. In this stage, researchers identified the common variables between entrepreneurship and marketing like complex decision-making, resource deficiency, and constrained brand loyalty. This stage was followed by the ‘growth stage’ of EM, i.e. the 1990s to 2015. In this stage, it was recognized that:
- Opportunity identification is the central part of EM
- In EM business, usually, the owner is the Chief Executive Officer and Chief Marketing Officer, so he is responsible for decision-making
- EM employs a combination of innovation, process, product and strategy to generate value for target customers, which in turn enables the firm to gain a competitive edge in the market place (Covin and Miles, 1999)
Different definitions of EM were offered in the growth stage, some of which are mentioned below:
- According to Morris, Schindehutte and LaForge (2002), EM involves proactive identification and exploitation of opportunities for acquiring and retaining profitable customers through innovative approaches to risk management which also involve value creation and leverages of resources.
- Beverland and Lockshin (2004) and Becherer, Helms and McDonald (2006) define EM as a marketing practice that specifically satisfies the marketing needs of SMEs. However, this definition excludes EM implication on large firms (Shiratina, 2016).
- Backbro and Nystrom (2008) define EM as a coinciding approach that intersects marketing and entrepreneurial behaviour whereby an entrepreneur engages in marketing activities while capturing new ideas from the market for value creation purposes (Shiratina, 2016a)
These three definitions are contrasting. The definitions given by Beverland and Lockshin (2004) and Becherer et al. (2006) are particularly applicable to SMEs; however, the definition of Backbro and Nystrom (2008) explains how creates generates value. On the other hand, the definition of Morris et al. (2002) is comprehensive and can be applied to individual entrepreneurs, small businesses and large organizations.
Collins and Shaw (2001) cite Omura, Calantone and Schmidt (1993) to explain the differences between traditional marketing and entrepreneurship. According to the authors, traditional marketing functions in a consistent environment with predictable market conditions are clear customers’ needs and demands. However, in EM, the entrepreneur creates the need in market and market conditions are inconsistent and unpredictable. Stoke (2000) highlights four differences between traditional marketing and EM: (1) While traditional marketing is customer-oriented and market-driven, EM is innovation-oriented and driven by an idea. Traditional marketing focusses on developing new products, but EM emphasizes on assessing needs of the target market. (2). Traditional marketing follows a top-down Segmentation, Targeting and Positioning (STP), but EM follows bottom-up STP of market. (3). Traditional marketing is built on 4 and 7 P’s, but EM uses Word-Of-Mouth (WOM) Marketing and interactive marketing methods. (4). Firms following traditional marketing employ formal market research tools, but EM firms gather information informally through networks.
Kolongahapitiya (2018) state different perspectives regarding the features of EM. Firstly, it is a concept that is useful for new, start-up business settings (Judith, 2012). Secondly, EM entails manipulation of resources and taking a reactive approach towards market (Judith, 2012). On the other hand, some researchers like Morris et al. (2002) and Judith (2012), mention innovation-orientation, risk-orientation and random marketing tactics as features of EM. However, according to Chaston (2016), EM has eight characteristics like resource leveraging, risk management, proactive innovation, innovation focus, customer intensity, and value-driven (See figure-1).
Figure-1: Features of EM; Source (Kolongahapitiya, 2018)
Another feature of EM is change management. Collins and Shaw (2001), Carson, Cormie and Hill (1995) and Kuratko (1995) argue that the focal point of entrepreneurship is the ‘change’. Collins and Shaw (2001) also explain that the marketing activities of EM-based firms also change as they grow. Table-1 shows different dimensions of EM developed from the definitions posed by EM scholars and researchers in different years.
|Year||Author||Dimension of EM|
|2002||Morris et al.||
|2004||Miles and Darroch||
|2004, 2006||Beverland and Lockshin
Bacherer et al.
|2011||Hills et al.
Kraus et al.
Jones and Rowley et al.
Hills and Hultman
|2012||Hacioglu et al.
Daniela et al.
|2014||Miles et al.||
|2015||Whalen et al.||
Table-1: Different Dimensions of EM; Source: Ismail et al. (2018)
It can be seen from the table that market-orientation, entrepreneurial-orientation and value-creation are some critical dimensions of EM. Market-orientation is the concept of identifying market needs and adhering to future customer demands in a responsible fashion (Lamb et al., 2012). Market-orientation is closely embedded in EM theory, as EM-based businesses adapt market-orientation by conducting research to identify the needs of customers (Stokes, 2000). Another concept of EM is Entrepreneurial Orientation (EO); According to Morris et al. (2002), a firm or an individual possess EO when it is highly proactive regarding opportunities and market dynamics, willing to take risks and focused on innovation. Moreover, resource exploitation is another concept that was embedded in EM (Ge et al., 2016). Since EM is typically associated with SME, resource exploitation generally means using resources in an improper or uncommon manner.
Miles et al. (2015) propose the concept of locus of EM. According to the authors, EM can be used in organizations across three different dimensions, including vertical, horizontal and temporal, as shown in table-2:
Top management develops and implements EM strategy
|EM is not confined to top-management only
EM is a part of organizational processes and culture.
|EM strategy is developed as a response to change in the external environment.|
Table-2: Locus of EM; Adapted from Miles et al. (2015)
The entrepreneurial marketing framework Gilmore (2011) is a combination of four elements shown in figure-2.
Figure-2: Entrepreneurial Marketing Framework; Source Gilmore (2011)
2.6.1. Marketing by Networking
While traditional marketing uses conventional research methods and marketing mediums, EM-businesses use ‘Networking’. Gilmore (2011) identifies networking as a process of gathering information via peers or business contacts and sorting out a business idea taken from the information (Gilmore, 2011). Networking creates intrinsic value for the entrepreneurial venture. Some benefits of networking for EM manager is the support for the decision-making process, market-situation evaluation and increased awareness of market-related issues or potential problems and customer concerns (Gilmore, 2011).
2.6.2 Developing Marketing Competencies
Collinson and Shaw (2001) illustrate that the competencies of entrepreneurs are closely related to the skills of EM. The authors explain that an entrepreneur is an individual who is bold to take risk, does not hesitate to adapt to change, has a task-oriented approach and possess the characteristic of lateral thinking. Correspondingly, EM also relates to these characteristics. Carson et al. (1994) elaborated that an EM manager must possess four key competencies including the awareness and knowledge about the target market, communication skills to direct the organization/followers, ability to recognize and seize a viable opportunity and experience of industry and job.
2.6.3 Adapting Standard Textbook Framework
The EM uses standard textbook frameworks including the marketing P’s, i.e. product, price, place and promotion.
2.6.4. Using Innovative Framework
Entrepreneurs try to be innovative, and they use innovative tools for marketing.
One of the key problems facing small firms is that as they grow, it can be increasingly difficult to maintain the same level of entrepreneurial effort as was expended in the initial stages of the firm’s life. In addition to this barrier, it is a natural tendency to veer towards activities that reduce levels of risk and consolidate the firm’s position. Therefore, the entrepreneurial marketer faces difficulty in maintaining the ‘newness’ and ‘uniqueness’ of his business idea. So, in order to sustain a competitive position in the market, an entrepreneur needs to stick to the features of EM which are discussed above.
Durham distillery (DD) UK was founded by Job Chadwick in 2014 as an entrepreneurial venture (Durham Distillery, 2019). The distillery is located in North East of UK at Jon’s hometown, Durham city. The distillery is a small project with seven employees. It sells different product types, such as gins, vodka, whiskey, and conniptions (Durham Distillery, 2019). The products are placed at numerous locations in the UK including Cafe21, Fenwick’s, Majestic Wine, House of Tides, and luxury hotels including Saehan Hall and Jesmond Dene House. Durham Gin has been a huge success, exceeding all targets and expectations with first bottle sold in February 2014 and 10000th bottle sold in December 2014 (Anon, 2019). The growing interest of customers in DD products is due to consistent taste, quality, and value for money. The brand has defined itself as a quality-oriented business and offer special launches, products and pop up shops to increase customer trust. Durham Distillery UK won the best taste award in 2014 which positioned the company as a strong market entrant for the distillery industry.
The challenges and opportunities for Durham Distillery have been identified after an analysis of its micro and macro environments.
Microenvironment consists of owners, employees, public, intermediaries, facilitators, customers and competitors. These are analysed below:
The Durham Distillery is owned by Jon Chadwick, who launched the distillery in 2014 by combining the traditional distillery manufacturing technique with modern methods Day (Durham Distillery, 2019). The organization has seven employees who are assigned specific tasks to do Day (Durham Distillery, 2020a). The employees are expert in their field of work, producing high-quality distillery products for customers.
Customers hold pivotal position in the organization. The company launches new products from time-to-time in order to sustain the entrepreneurial image of the brand which was identified as an issue for EM planners. For example, it launched Malt Whiskey in 2018 Day (Durham Distillery, 2018), the Blackberry and Ginger Gin liqueur in 2017 Day (Durham Distillery, 2017b) and Strawberry and Pink Pepper liqueur in 2017 Day (Durham Distillery, 2017c). These products offer gin and liqueurs in different flavours in order to maintain the brand image as an entrepreneurial business. Moreover, it launches pop up shops on special events with specialized products to facilitate customers. For example, pop-up shops on Valentine’s Day (Durham Distillery, 2017a), Christmas Day (Durham Distillery, 2015) Easter Day (Durham Distillery, 2017d) and bank holiday Day (Durham Distillery, 2020b) were specially launched by DD to cater specific needs of customers for events.
Durham Distillery competes with competitors like Old Tom’s gin bar and Market Hall Wines who launch special drinks on occasions and also offers discounts on bundle purchases. The brand is facing tough competition from local and international competitors. For example, the employees of Old Toms Gin Bar are more than 50 (Old Toms Gin, 2020a) while DD has only 7 employees. The product range of Old Toms Gin is extensive with more than 40 flavours in gin product line only (Old Toms Gin, 2020b). However, Durham Distillery offers 6 flavours only (Durham Distillery, 2020c). The product range can be an issue for Durham Distillery to retain customers as they can easily switch the decision to old tom’s gin products.
Durham Distillery has only 30 reviews on its Facebook page while Old Toms Gin Facebook page has 1327 recommendations (Old Toms Gin, 2017). The Facebook page of Durham Distillery has a bad review regarding customer service. According to the review, the staff at the gin bar dealt with a customer and his mother in a rude manner (Durham Distillery, 2020e). Notably, the company has an average rating of 4.7 based on 30 reviews; on the other hand, Old Toms Gin Bar has 4.8 average rating with 237 reviews. Most of these reviews mention good ‘customer service’, so maintaining friendly and efficient customer service is also a strategic challenge for the Durham Distillery. Nevertheless, brand names like Chivas Brothers, William Grant and Sons and Bacardi (Whsikey Invest, 2019) are also expert in maintaining their product quality and therefore, challenge Durham Distillery to sustain the market position. Some intermediaries of Durham Distillery are Majestic Wines, Bay House, Corbridge Ladder, Roots Farm shop, and The Blue Bells (Durham Distillery, 2020d).
Porter’s five forces model assesses the attractiveness of a sector based on 5 dimensions, which are shown in figure-3.
Figure-3: Porter’s Five Forces Model; Source Magretta & Porter (2012)
Applying Porter’s five forces model, it can be seen that:
- The Durham Distillery faces a high threat of substitute because several alternative products such as beer and white wine are available in the market. Also, the presence of strong competitors can facilitate the customers to switch their buying decision towards other brands.
- The threat of new market entrant is medium because establishment of distillery cost is minimum of £50,000 (GinFoundary, 2015). Moreover, the location, the size of distillery and product line choice also affect the cost of the distillery. Moreover, a distillery has to comply with legal aspects of selling alcohol in the UK. Therefore, the threat of market entrant is medium.
- It is assumed that the bargaining power of suppliers is medium-to-low because the company does not need a wide variety of raw materials and supplies for manufacturing the drinks it sells.
- Moreover, the bargaining power of customers is high because the products by competitors are also available in the market. The customer can bargain on his decision of purchase and easily shift to any other product.
- Industrial rivalry is also high because competitors like old Toms Durham have established market position. Therefore, the brand is facing tough competition to retain existing customers and attract new market segment.
The macro-environment of a firm consists of the political, economic, social, technological, environmental and legal components which are analyzed below:
The United Kingdom governed by parliamentary democracy and monarchy. The political establishment of royal ruling decided in 2012 that the supply and consumption of alcohol should be taxed (Hawkins et al., 2012), to increase the income by the liquor industry. The decision to regulate the taxes from liquor industry has affected the sales and revenues of the brands. Moreover, after the Brexit decision, the UK liquor market faced the issue of ‘free movement of goods’ to ensure supply to all state of Europe like before (Fitzgerald, 2017). According to Speakman and Hale (2019), Brexit presents opportunities for players in the alcohol industry, as it is expected that the regulatory measures will be lightened as the government will try to form trade agreements after Brexit.
UK has an established economy with GDP per capita of 39,702 USD (WB , 2018). The buying power of UK consumers is expected to be decreased by 0.6% by the beginning of 2020 (Reuters, 2019). This is due to the fact that the average pay of UK earner is low since 2008 and has not increased even after the trade and employment decisions made after Brexit (BBC, 2019). The average disposable income of a common household in UK was £29400 till 2019 (ONS, 2019) and the disposable personal income decreased to 351816 GBP Million in the third quarter of 2019 (Trading economics, 2019). The weakening of buying power coupled with decreased disposable income presents challenges for the brand, as these factors might hamper its growth.
The ageing population in the UK is rising with every passing year (Age UK, 2019), which implies that in the long-run, a large segment of alcohol consumers will decrease consumption. However, the consumption of alcohol is increasing with every passing year, which shows the robust presence of alcohol consumption in the UK lifestyle (Statista, 2012). Increased consumption of alcohol shows growth opportunities for the brand. Nevertheless, consumers are becoming health conscious in the UK, which can affect the brand negatively.
UK society uses advanced technology as a medium of communication. Almost 79% of people are using smartphones and gadgets of communication regularly (Finder, 2019). There are 45 million social media users in the UK and about one in every 5 minutes, is spent on social media (Avocado social, 2019). UK consumers spent £106.46 billion ($141.93 billion) online in 2019, which accounts for 2.7% of total retail sales of 2019 (Emarketer, 2019). Therefore, digital media and social media present new marketing venues for the brand.
The general trend of liquor consumption remains sustained and socially accepted in the UK (Alcohol change, 2019). However, alcohol misuse, i.e. heavy drinking, the substance abuse, addiction, diseases due to heavy liquor consumption, cause death, illnesses and disabilities among 15-49 years of liquor consumers (PHE, 2016). The Wine and Spirit Trade Association (WSTA) has continued increasing taxation on alcohol consumption and purchase in order to control death rates and substance abuse via alcohol. Moreover, the value-added tax on alcohol products, collection of taxes under provision collection of taxes 1968, etc. are some legal regulations to be followed by liquor producers and sellers in the UK (HMRC, 2012). So, Durham Distillery is required to conduct its operations within the boundaries of the legal environment.
The Scotch Whisky industry environment strategy was launched in 2009 (The cask, 2019), which enforced the adoption of ‘green practices. It was revived in 2016 to ensure the sustainability agenda in liquor industry practices. Moreover, as the UK is a signatory of UN sustainable development goals (SDG) agenda, the liquor industry is bound to follow the rules of SDG policies. For example, the liquor industry has started extracting juice from leaves and then heating it to create a rick syrup rather than to burn them by using heavy processes to create distillery spirits (The cask, 2019). Such small but cost-effective and environment-friendly decisions have helped UK industry in environment conservation sustainable practices. The trend of environmental protection and safety presents opportunities for the Durham Distillery to position itself as an environmentally-responsible business which can increase its sales.
This report had two primary objectives. The first objective was to analyse the literature pertaining to Entrepreneurial Marketing. The second objective was to conduct an analysis of challenges and opportunities emanating from the micro and macro environment of Durham Distillery.
It can be concluded that EM can be explained as a framework for identification and exploitation of opportunities to obtain and retain profitable customers through innovative approaches to risk management, value creation and usage of resources. While traditional marketing is customer-oriented and market-driven, EM is innovation-oriented and driven by ideas. The framework of EM is applicable to both large and small businesses. Some distinguishing features of EM include tendency to innovate, risk-taking aptitude, market-orientation, entrepreneurial-orientation, value-creation, uncommon use of resources and marketing by networking.
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It can also be concluded that the Durham Distillery faces the following marketing-related challenges:
- The company faces a high threat of substitute and high bargaining power of buyers
- It faces a tough competition from strong brands like Old Toms Gin Bar and Market Hall Wines who offer wider product range, cater a greater proportion of customers (as evident from analysis of Facebook reviews), have a larger employee base and offer efficient customer services.
- The customer service process of the company has loopholes and needs improvements
- Decreased buying power and reduced disposable income might negatively influence the sales of the brand.
However, at the same time, the growth of alcohol consumption coupled with lightening of regulations for the alcohol sector, present opportunities for the enterprise. Even when disposable income is decreasing, the consumption of alcohol is increasing in the UK. So, the brand can cater the potential growth. Moreover, digital media and social media present new marketing venues for the brand. The trend of environmental friendliness also provides opportunities for the brand to position itself as a responsible company.
- To beat the competition and capture growth opportunities, Durham Distillery must use entrepreneurial marketing tools and frameworks. It should take a horizontal approach to EM, as identified by Miles et al. (2015), by incorporating entrepreneurship and innovation throughout the company’s culture, management and employees. As the company has few employees and few management layers, EM can be integrated horizontally.
- The brand must become innovation-oriented. It must conduct qualitative and quantitative market research tools periodically to assess the changing needs of target customers. Specifically, the brand is recommended to conduct an audit of the market after every four months. The market audit will assist the company in innovating proactively.
- The company should engage in marketing through networking. It must develop contacts and linkages within its peers to obtain information informally through networks. Through networking, the company must also launch new flavours to expand its product range. It should offer more flavours to attract a larger segment of customers.
- The company must train its staff members to deal with customers in a friendly and efficient manner so that a positive WOM can be developed for the brand.
- The founder and manager of the brand must develop competencies of EM by becoming more willing to tolerate risk and take bold decisions.
- The brand must increase its presence on social media. It should also use interactive tools like blogs and Search Engine Marketing (SEM), which are less costly than traditional advertising methods
- The company should position itself as an environmentally-responsible business through its marketing channels like its website and social media pages.