Issue 5

Scientific Papers (www.scientificpapers.org)

August 2011
Journal of Knowledge Management, Economics and Information Technology

Developing Entrepreneurial Marketing Mix: Case Study

of Entrepreneurial Food Enterprises in Iran

Authors: Amir Mohammad KOLABI, University of Tehran,

[email protected], Hamid Khodadad HOSSEINI,
Tarbiat Modares University,
[email protected], Rosa MEHRABI,
University of Tehran, [email protected], Aidin
SALAMZADEH, University of Tehran,
[email protected]

The purpose of this paper is to identify and exam the main elements of
entrepreneurial marketing mix in entrepreneurial enterprises. Our focus in
this study is on Iran's top small and medium-size
business entrepreneurs in 2007, which possess a brilliant experience about
entrepreneurial marketing practices. Accordingly, we aim to identify how
these enterprises use their previous knowledge and experience to extract
elements of marketing mix, which are adjusted in entrepreneurial marketing.
As its research framework, this study has used the Quality - Exploratory
approach specifically case study according to Ghauri framework. Data were
collected from 17 entrepreneurial enterprises. Different methods including in-
depth and semi-structured interviews, along with open questions from
entrepreneurs and marketing managers were employed in gathering
information.
Finally, Content analysis method also inductive inference used for
data analysis. Results indicate that the Entrepreneurial Marketing Mix include
5Ps which element of Person is a new element among others. However it
should be mentioned that there is an entrepreneurial approach in component
of Price, Place, Product and Promotions as well and some new component
have been added to the conventional marketing mix.

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Keywords: Entrepreneurial Marketing; Entrepreneurial Marketing Mix; Small

and medium size enterprise

Introduction

Recent economic studies consider economic growth as a prerequisite for

progress in human society and meanwhile entrepreneurial approach to
economy, especially in third world countries, will be terminated to
economic development (Simpson et al. 2009). Nowadays entrepreneurial
development is considered as the best way to leave recession and if firms can
provide the highest degree of value for their costumer, they will both enjoy
their own competitive advantage, position themselves in the market, and
also among their target customers (Hill and Hultman, 2006).
Based on Schumpeter (1960), entrepreneurship process includes
innovation in creating new products/services, processes, market and
strategy (Crane, 2010). So accordingly, this process is considered as a way to
create sustainable advantage in market which allows identifying new needs
and demand of costumer and meet their satisfaction (Martin, 2009).
On the other hand, marketing is an organizational function and a
set of process for create, communicate and deliver value to customer and
manage relationship with them in order to achieve profitability and value for
organization and its stakeholders (Fillis, 2000). Then, emerging business
success requires establishing long-term relationships with customers and
deliver value to them and the result of this operation is to achieve loyal
customers, which are valuable resources for disseminating product/service
among other consumers (Crane, 2010). Yet, this is marketing that enables
entrepreneurs to discover, create, motivate, satisfy and meet the demands
and desires of customers. So that in entrepreneurial logic, scholar believe
that a successful business is often created by an Intelligent and creative
entrepreneur who considers one reason of market pain and tries to find out
some specific way to cure them (Crane, 2010: P.2).
Literature review leads us to the fact that entrepreneurship and
marketing are both have been considered as two different research areas,
but by raising awareness about the impact of entrepreneurship and

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innovation on the marketing and on the other hand marketing role in the
success of entrepreneurial activity, these two field of study were combined
and the concept of “Entrepreneurial Marketing” have emerged (Hill and
Hultman, 2006). Contemporary definition of this concept is suggested by
Morrist et al. (2002:P.5), which says that:”Entrepreneurial Marketing is a
proactive identification and exploitation of opportunity to obtain and
maintenance profitable customer through innovative perspectives on risk
management, value creation and entrepreneurial resource navigation”.
In most of the literature, entrepreneurial behavior is attributed to
small and medium enterprises. This is because an entrepreneurial activity
entails innovation, risk-taking and proactive performances (Stokes, 2000),
and since small and medium enterprises face numerous constraints due to
unavailability of enough resources, their activities are infused with more
risk-taking and a higher level of innovativeness, to the effect that
entrepreneurial activities can be observed mostly in the small and medium
enterprises (Stokes and Spring, 2000). Moreover it should be noted that
small and medium sized enterprises have some major problems in field of
marketing such as: having small range of customer (few major customer),
financial constraints in field of marketing, limited resource, non-normative
and variable effort and excessive reliance on the owner's marketing
competency (Stokes, 2000). Considering these limitation, an entrepreneurial
SME is not able to meet the needs of all customers in the market place, so
the entrepreneur should focus his/her effort to attract a specific group of
potential customers, which is named target market. Selection of these target
customers requires going through different stages such as specialized
procedures and processes, which are, include targeting, segmentation and
identification of customers and using specific methods for attracting and
maintaining these group of customer. This effort is called the
"Entrepreneurial Marketing Mix". In fact, marketing mix is the integration of
marketing programs that are used to attract and keep long-term relationship
with customers (Crane, 2010:P.6).
Given the above discussions, it can be deduced that the marketing
mix is the main essence of marketing activities in entrepreneurial small and
medium enterprises and dominates all the firms’ activities. However, and
despite its importance, there is a lack of appropriate introduction of an
entrepreneurial marketing mix in the existing literature commensurate with

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small enterprises. Hence, in this study, we aim to identify main and

subsidiary elements of marketing mix in Iranian entrepreneurial small and
medium sized enterprises. Our main focus in this study is on Iran's top small
and medium-size business entrepreneurs in 2007, which possess a brilliant
experience about entrepreneurial marketing practice. So we used the
Quality - Exploratory approach specifically case study according to Ghauri
framework to extract these elements due to weakness in the theoretical
background and empirical research as well as the lack of effective
components in the marketing mix is entrepreneurial research.

Literature review

One common aspect between entrepreneurship and marketing is

the study of methods through which marketing concepts and principles
could be applied in the field of entrepreneurship. Because this issue has
been repeatedly acknowledged that the marketing techniques used by
entrepreneurs are somehow different from the concepts presented in the
literature and traditional marketing contracts (Hill and Hultman, 2006).
Traditional marketing is a deliberate and organized process and its concepts
are based on the assumption that identifying customer needs, requires
formal research and in order to meet these needs the firm plans to create an
organized structure for new products and services development. Yet,
entrepreneurial behavior is informal, unplanned and based on individual
intuition and understanding of events in the market place (Hill et al, 2009).
In the literature, entrepreneurial behavior has been attributed to SMEs. The
nature of an entrepreneurial acting involves three dimensions including:
innovation, risk taking and proactiveness; and since SMEs face some
limitations such as having few major customer, financial constraints in field
of marketing and limited resource, their effort especially in current
turbulence environment, associated with higher risk and they need more
creativity and innovation to face the risks. Then, entrepreneurial behavior is
more obvious in small and medium size enterprises (Stokes, 2000).
SME owner’s claim that their marketing activities in contrast to
other organizational function, are in lower degree of formality and they
consider marketing “something that a large and established company has to
do” (Stokes and Spring, 2000). Despite this evidence, marketing is essential

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for survival and development of an entrepreneurial SME (Carson et al.,

1995). Besides, since marketing principles and theories have made through
the review and study of marketing experience in large company, it seems
that it is time to consider marketing process in the field of small business to
develop our general understanding of the concept "entrepreneurial
marketing".

Entrepreneurial Marketing

For entrepreneurs and owner managers of small enterprise,

marketing is a method or in other words, a tactic for catching opportunities.
They don’t consider marketing as an organizational culture or a strategic
process, rather their definition of marketing have been taken from their own
subjective and have great emphasis on using promotion techniques to
attract customers while ignore other non-promotional aspects of marketing
such as product development, pricing and distribution strategy. Most of the
owner managers of small enterprise believe that their business relies on
word of mouth marketing so they have no need to use informal marketing
techniques. This does not necessarily mean that they do not have peers on
fundamental aspects of marketing, but in fact they are not familiar with the
concepts and terminology in this area and their assumption comes from
their personal experiences (Stokes, 2000).
In fact they have a strategic awareness, especially in review of
market situation, segmentation, find target market, Establish direct
communication with them and finally provide customer services (Crane,
2010). There are also experimental evidences that show entrepreneurial
personality characteristics such as being consistent and persistence have
positive effect on performance of an entrepreneurial enterprise (Sorensen
and Chang, 2006). List of personality characteristics and core features of
prominent entrepreneurs which are of paramount importance is presented
in Table 1.

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Table1: Characteristic of entrepreneurs (Sorensen and Chang, 2006)

Year Scholar Characteristics of entrepreneurial Core characteristic

1775 Cantillion Power trading in risk
 Entrepreneur as a dealer – agent (for Factor of
 Entrepreneur do not see any production)
difference between risk and
uncertainty
 Emphasis on interaction of
entrepreneurial goals

1800 Say  A main input in the production Judgment power

process
 With management and judgment
power
 Use his/her judgment power to
recognize opportunity

1875 Marshal  Emphasis on innovation in addition Innovation

to emphasis on two previous view
 Innovation to reduce costs

1911 Schumpeter  Innovator and creator of new Innovation and creation

component new component
 Will tolerate uncertainty
 Banker

1921 Knith  Distinguish risk and uncertainty Uncertainty taker

 Will tolerate uncertainty

1973 Kerzner  Have entrepreneurial conciseness Entrepreneurial

 Have access to information conciseness
 Recognize opportunity with usage of
information
 Make Imbalance in market

1975 Shultz  Coordinator and Resource Allocator Resource Allocator

 Entrepreneur as interactive

2000 Shane and Entrepreneur as Nexus with Opportunity Nexus with Opportunity
Venkateraman
2003 Cason Decision maker Decision making

In the literature, generally, there is a notion that marketing and

entrepreneurship both emphasize on opportunity recognition in dynamic

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environments and EM is the way to identify market opportunity and transfer

resource such as knowledge, technology and capital from social network
into the organization which consequently creates value for customers (Hill
and Hultman, 2006).

Entrepreneurial Marketing in small and medium sized enterprises:

paradigm of modernity

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 both 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 have became
the inherent characteristics of SME marketing (Zontanos and Anderson,
2004).
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:

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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).
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).

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

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particular marketing practices (Hill et al, 2008). It is generally accepted that

the characteristics and features of a small 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).

Methodology

As previously noted, the present study tries to identify appropriate

elements (components) of entrepreneurial marketing mix which are applied
in Iran's Top small and medium-size business entrepreneurs. Considering
the emerging issue of entrepreneurial marketing concept, and the fact that
in previous studies, does not found any research which identify all
appropriate elements of marketing mix applicable in entrepreneurial
enterprises, in this paper, a qualitative research approach and specifically
exploratory case study strategy is selected. Besides, implementation process
is based on stages of implementation case study, matching Ghauri's theory
which consists of seven steps include: Stage one- Research problem
definition, Stage two- Select initial conceptual framework and design
research tools, Stage three-Sampling, Stage four- Systematically data
collection, Stage five- Management and classification of the data collected,
Stage six- Analysis of findings, Stage Seven – Theorization ( Ghauri,2009:49-
20).

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Research stages

Stage one - Research problem definition

As mentioned above, the purpose of this study is to identify
elements (components) of marketing mix applicable in Iran's top small and
medium-size business entrepreneurs in 2007.

Stage two - Select initial conceptual framework and design research

tools
Conceptual framework considered in this study is based on
knowledge of marketing and entrepreneurship or in other words,
entrepreneurial marketing framework which is applied to organize results of
reports and interviews and gathering and managing findings. Thus, selected
framework composes of entrepreneurial marketing elements include: Risk
management, Innovation, opportunity recognition, Proactiveness, Customer
intensify, Value creation and resource leveraging. Mentioned concepts were
applied as a basis in designing open questionnaire and gathering data from
entrepreneurs.

Stage three - Sampling

Since the case study with exploratory approach, has great
emphasize on processes and understanding and interpreting them, for
extracting entrepreneurial marketing mix we apply depth and semi-
structured interviews and discussed open question with 17 top entrepreneurs
and senior directors of marketing in 17 small and medium-size enterprises
which are selected by Iranian Ministry of Labor and Social Affairs as top
entrepreneurial enterprises in 2007.
It should be noted that, people who directly faced to
entrepreneurial marketing subject were the main target in our interview, so
our sampling method was targeted.

Stage four - Systematically data collection

Since collecting detailed data from different references, is the main
process in case studies, in order to increase the validity of this research, we
did not only confined ourselves to the results collected from interviews but

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also secondary data sources and previous texts have been used to achieve
more reliable and richer results.
One of the basic foundations of interpretive researches is theoretical
sampling which means: data collection based on concepts that come from
the theory, going to different places and meet different people or events
which give us the opportunity to discover differences between existing
concepts. It should be mentioned that qualitative methodology allows the
researcher to distinguish the theoretical characteristics from general
characteristics of a subject that simultaneously rooted in empirical
observations (Heath and Cowley, 2003).
In this research, we focused on entrepreneurial enterprises, which
have a close interaction with their market place. Data collected during 3
months and 24 hours in-depth and semi-structure interviews. All points
have been noted and additional notes gather right after each interview.
Eventually, our primary data consists of 120 paper notes. Since the main
theme of the case study is collected detailed data from multiple sources, in
upcoming research to ensure validity of results and to benefit from the
advantages of pluralism, we did not only put stress on interview, but also we
used scientific databases as well as article publications as secondary
resources.

Stage five - Management and classification of the data collected

In this paper, we designed "semi-structured" interviews and then
asked interviewees to describe issues outside theoretical frameworks. It
should be mentioned that the process of interviewing would continue until
reliable results were collected.
In the next step, answers were adjusted with theoretical framework,
and content analysis method including data purging, data presentation,
codification, thematic analysis and categorizing was applied to analyze data.
Based on the results from the interviews, 54 components were obtained and
based on their concepts and thematic analysis, they were categorized into
five main elements namely the entrepreneurial marketing mix. The
components for each element of this mix are outlined in Table 2.

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Table 2: Codification of conducted interviews

participants Components Dimension

،16 ،9 ،3 ،1 PUBLIC RELATIONSHIP (PRIVATE/ PUBLIC) PERSON
2 ،8 ،11 ،12 CUSTOMER COMMUNICATIONS
Correct decisions with the correct information
،1 ،9،15،17،7 Popular participation
13 ، 10 ،11 INDIVIDUAL INNOVATION
RISK TAKING
Having ethics and adhere to the culture of market
،16 ،12 ،5 ،8 USING BODY LANGUAGE
،13 ،9 ،11 ،17 Extensive social networking and efficient use of
2 them
Rapidly changing
،1،9 ،11 ،2،6 Do not use media advertising PROMOTION
،4 ،7 ،16 ،12
8 Do not use verbal and indirect advertising
Create a complete cycle of non-homogeneous
products
Direct communication with primary and secondary
customers
New product development based on Entrepreneurs
preferences
New product development based on market needs
،14 ،12 ،2 ،9 Using quality products and lack of ad
5،8،17،16 Attending exhibitions and private gatherings
Updating knowledge
Using tech day
،3 ،1 Create an intimate relationship with the original
،7 ،11،1،6،4 buyer
15 ،13 Commitment to responsibility and ethics common
in market
use of incentive award and supports
Customer classified as primary and secondary
categories
Use the distribution system for Ads

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Long-term communication
Ensure customer satisfaction during and after the
exchange process
،5 ،4 ،3 ،1 price-quality fitness Price
،10 ،8،7 ،6 Working with distributors
15 ،14،12 Not giving loans and credit to distributors
Having a pricing strategy
Lower production costs
،2 ،9 ،3 ،12 Using capillary distribution system Place
،14 ،17 ،13 ،1 Create a full food basket for the primary customers
10 Creating innovation in distribution networks
Categories of distributors
Considering the profit margin
Cooperation with competitors to expand activities
speed up playback to shops and to public
companies
،7 ،16 ،9 ،5 Outsourcing distribution station
13 ،3،10 ،8
Create competition for the product
Used mess to distribute
Distribution under license
Market categories
،9 ،12 ،4 ،8 Using a multi-brand product Product
،8 ،3 ،15 ،13
14 ،10 ،9 Classification based on the quality
Homogeneous production with diverse approaches
Variety of products with non-homogeneous
approach
Given customer conformity and needs
Efforts to enhance brand
،8 ،6 ،4 ،12 Product offering in different packages
،17 ،14 ،5 ،9 Applying the innovations in products
15 ،16 Match all customer taste
the highest price and not necessarily highest
quality

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Stage six - Analysis of findings

Results indicate that elements of entrepreneurial marketing mix
include 5 main elements and 54 components (sub-element). In addition, the
hypothesis, which shows difference between traditional marketing mix and
entrepreneurial marketing mix, has also been verified.
As is shown in Table 2, new entrepreneurial marketing mix posses 5
main elements including: Person, Product, Price, Place, and Promotion. The
element of Person (owner manager / entrepreneur) has been extracted
during the study as a new element and then added to the previous cases. In
this new classification, Person consists of 10 sub-elements which somewhat
are personality characteristics of the owners such as risk management,
creativity, his personal ability to communicate directly with customers and
using body language and communication in interactions with others. These
features will apply not only to the early stages of the entrepreneurial
marketing process which is identifying and exploiting opportunities, but
also in later stages of this process, including product introduction or market
growth. On the other hand, individual access to social networks and
exploiting them for the sake of public relations with public and private
institutions, also the participation rate of managers, his decision making
strategy under uncertainty, and his ability to react to the changes, are
prominent elements which were extracted during our research.
The element of product includes 10 sub-elements which includes
component such as Product Categories based on quality, attention to
customer conformity and he needs, Product offering in different packages,
using innovation in products, matching all customer tastes in the
production, and Product offering in highest price and not necessarily the
highest quality, are among new elements which were extracted and added to
previous ones.
The element of Price consists of 5 sub-elements. Quality fitness
prices, cooperation with distributors, and not giving loans and credit to
distributors are new elements added to the previous marketing mixes. Study
revealed that elements of Promotion have 17 sub-elements which
components such as entrepreneur's direct interaction with their primary and
secondary customers, using quality products and not using ads. , updating
knowledge and information, the use of superior technology, creating an
intimate relationship with initial buyer's, commitment to responsibility and

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ethics in market place, Use of incentive awards and support, customer

classification of primary and secondary categories, the use of distributed
systems for advertising, long-term communication and ensure customer
satisfaction during and after the exchange process are different from those
that introduce in previous studies.
Finally, this research revealed 12 sub-elements for Place
(distribution). Creating a full basket of food for early customers, making
innovation in distribution networks, classified distributors and profit all of
them, considering the profit margin, speed up playback to shops and to
public companies, outsourcing the positions of distribution, the use of mess
to distribute, distribution licensees and market categories, are new elements
which have not been mentioned in the previous studies.

Stage Seven - Theorization

Using data obtained in this research, and considering this important
fact that the desired output of a qualitative research method in an
exploratory research is a hypothesis, we realized that entrepreneurial
marketing mix is different from common marketing mix.
New entrepreneurial marketing mix consist of 5 elements and notes that the
component of these new elements are different from olds ones.

Results and Deduction

In this study, we conceptualize the concept of entrepreneurial

marketing mix components and we avoided from processing of purely
theoretical explanation of the issue in question. So in this conceptualization
we declare that: entrepreneurial marketing mix is an innovative process
which utilizes the capabilities of individual and combines components of
Price, Product, Promotion and Place, trying to deliver further values to the
primary and secondary customers more than other competitors and gets
more profit.
Hence, according to the subjects mentioned in the research process,
questions raised in the study could be responded. Results indicate that the
element of Person is a new element amongst others. However, it should be
mentioned that there is an entrepreneurial approach in component of Price,

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Place, Product and Promotions and as you have noted previously, some new
components have been added to the previous combination.
Finally, total elements of an entrepreneurial marketing mix
including 5 major elements and 54 sub-elements are depicted in Diagram 1.

Product Person

10 10
compone compone
nts nts

Entrepreneuri
al Marketing
12 5
Mix
compon compon
Place Price
ents ents

17
compon
ents

Promotion

Diagram 1: Entrepreneurial Marketing Mix (Own elaborated)

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