Examining the Relevance of IMC in the Australian SME Context

Sandra Luxton, Cori Hodge and Mike Reid

Monash University

Abstract

Small and medium-sized enterprises (SME’s) are a pivotal part of the Australian economy.
There has been a wealth of literature on the challenges facing SME's, particularly on the
issues of resource constraints and a lack of marketing expertise. These issues are intensifying
the challenge of managing marketing communications and while the concept of Integrated
Marketing Communications (IMC) has been offered as a ‘panacea’ to the improvement of
marketing communications, little research has been undertaken to explore its relevance in the
SME context. This paper identifies a research agenda for examining associated issues.

Introduction

Small and Medium Sized Enterprises (SMEs) are defined by the Australian Bureau of
Statistics (ABS) according to number of employees and industry sector. Small businesses
typically have fewer than 20 employees in the construction and services sector (our largest
employment sector), or fewer than 100 employees in the manufacturing sector. Medium sized
enterprises are all firms that fall between small and large enterprises - which are those with
more than 500 employees. ‘SME’ is an internationally recognised acronym, however it can
be misleading. From a global perspective, defining an SME is difficult because it depends on
the individual country. Each country has its own definition in recognition of the importance
SMEs play in that specific economy. Furthermore, much SME literature comes out of the
USA and UK, and is based on firms with closer to 250 employees. Clearly, there will be
major differences in business management and economies of scale opportunities etc for a firm
with 215 employees as opposed to one employing only 15.

'SME' covers a wide range of business types, from the self-employed through to multinational
public limited companies with up to 250 employees, and herein lies another difficulty. It may
not be reasonable to make comparison, or joint classification of firms with employees of say,
1 or none, with those employing 20, 90 or even 150. The ABS reports that only 9% of
Australian businesses employ ten people or more, and over half of our private sector
businesses don’t employ any staff. Hence, many firms identified as SMEs are actually ‘micro-
businesses’. The most common international definition of micro-businesses are those firms
that employ 5 people or less. Reports indicate the high growth in SMEs in Australia, however,
it must be recognised that many of these are micro-businesses. Indeed, these very small firms
are estimated to account for over three quarters of Australia's private sector, or in excess of
630,000 firms (Gibson). Prominent authors in this field suggest that it is pointless to talk of
marketing planning and strategy development for micro-businesses because they lack time
and resources to implement formal programs (Carson 1989). The same however is said of
SMEs in general, and although limited compared to larger firms, SMEs can and often do
operate with a marketing focus.

Even allowing for a possibly ‘over-stated’ size of the SME sector due to this inclusion of
micro-businesses, there is no denying the predominance of small firms which are a pivotal
part of the Australian economy (McLennan 1997). Overall growth in recent decades has seen

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small businesses grow to approximately 800,000 firms, representing well over 80% of total
businesses (Jentzsch 1998). This is not peculiar to Australia, with 20 million small businesses
in Europe said to account for 99% of all businesses in the EU and providing employment to
65 million people (UK Dept. of Trade and Industry, 2002).

Despite evidence that Australian SME's may be growing in importance, they are not without
challenges and problems. The challenges are not only marketing in nature, but also related to
the external environment and resources, that is time, skills and financial resources (Weinrauch
1991, Huang 1999). Consequently, better understanding the way such firms operate, and
investigating the way that marketing is, or could be utilised is a research pursuit of the highest
imperative. One area of marketing that represents a particular challenge to SMEs is that of
marketing communication.

SMEs and Marketing Communication – The Need for Research

Traditionally marketing academics and practitioners have supported the notion that marketing
communications activities play an important role in building and maintaining strong brands
(Assael 1995; Jones 1996; White 1999). In response to concerns about performance and
accountability of traditional marcom approaches and the need for greater accountability of
marketing expenditure, an increasing number of firms are considering how to improve the
management and integration of their marketing communications activities.

Huang (1999) found that promotion, public relations, and/or advertising were the most
frequent problems encountered by SME's, with causes speculated as being lack of marketing
or marketing communications expertise and budgetary constraints (Huang 1999). It suggests
that the successful management of marketing communications proves to be a critical issue for
SMEs (Cook 1996; Mazzarol 1996). If this is the case then the question is how can SME's
overcome such challenges to improve marketing communication processes.

In the context of marketing communications management it is obvious to see a number of

global changes impacting on how marketing communications are managed and implemented.
Common explanations for the so-called diminishing effectiveness of traditional promotions
activities and the search for improvements to the management of marketing communications
include (Clarke 1996, Duncan 1996, Gronstedt 1996, Kitchen 1997, Schultz 1993):

1. Reduced faith in mass marketing.

2. Increasing reliance on more highly targeted communications methods.
3. Increased turnover of brand management personnel.
4. Greater demands placed on marketing communications suppliers to be brand custodians.
5. Increased efforts to measure/improve communications ‘return on investment’.
6. Fragmentation of traditional media

In the SME context, these issues in marketing communications are intensified by consistent
themes (Huang 1999, Carson 1995) facing small and medium sized enterprises which include:

1. Resource constraints, including money, technology and time

2. A lack of marketing expertise (although also a resource constraint)
These factors have given rise to investigations into alternative ways of thinking about
managing marketing communications. Despite its growing popularity, there has been little
research on the potential of integrating marketing communications efforts to overcome these

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issues for SMEs. Therefore, the concept of what is IMC and what its role is in navigating this
changing environment must be examined. The scarcity of research in the SME context
emphasises the question as to whether or not IMC has any relevance at this level.

The IMC Paradigm

Integrated Marketing Communication (IMC) is a relatively recent concept, described as a

philosophy that stresses bringing together all the variables of the marketing mix and
integrating their programs and activities (Duncan 1998). The philosophy is that it is critical to
ensure consistency through all marketing activities that communicate with a firm’s customers
in order to facilitate synergy and maxise communications impact (American Marketing
Association). An emerging paradigm, IMC has been offered as a potential ‘panacea’ or cure-
all to the improvement of marketing communications. In particular, research on the outcomes
of IMC implementation has shown improvements in the efficiency in implementing
marketing communications strategies, effectiveness of communications, and also achieving a
better return on marketing communications investments (McGoon 1998, Hartley 1999).
However, IMC has emerged with a series of debates over what it is, how it can be measured,
whether it is agency or client driven, and also what it can achieve in the improvement of
marketing communications (Phelps 1996; Kitchen 1997; Cornelissen 2000; Phillips 2000).
Some authors suggest that IMC and its impact on brand performance will assume such
importance that it will become the essence of marketing approaches and competitive
advantage in the 21st century (eg. Kitchen 2000), whilst others suggest it is no more than a
management fashion or ‘fad’ (Cornelissen 2000).

A major concern of IMC in Australia is its emergence based on research centred on large US
and UK based, multi-branded firms. Indeed evidence from ‘senior vice-presidents of
marketing’ and large firms such as Dow Chemicals, suggests that the major research on IMC
has been conducted primarily with very large firms (Kitchen 1997, Low 2000). Hence one
must question the ‘panacea’ tag, given the little research on IMC in the SME context.
Therefore, it is seen as critical to investigate these issues in the management of marketing
communications within the context of SME’s and to consider whether IMC is of significance
in face of the more limited scope of SME’s given their resources and marketing objectives.

Research Issues - Congruency of IMC Elements with SME's

For SME’s the notion of planning raises many questions such as: do marketing managers in
SME's have the time and ability to execute planning processes such as these? With
constraints on resources, such as time, and lack of expertise being identified as challenges
facing SME's, much of the literature, despite arguing the benefits of strategic planning,
comment that most managers simply can not justify planning for marketing communications
activities (Carson 1985, Carson 1989). Hence, both the benefits and viability of strategic
planning for marketing communications in SME's is in question. With lack of expertise being
identified as a marketing communications challenge facing SME's, it would appear that the
development of cross-functionality would be quite beneficial. It may overcome a lack of
expertise and an inability to hire marketing communications specialists by developing the
expertise of existing employees across various functions within the firm. However, minor
problems experienced by many smaller firms such as high staff turnover and the lack of time

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or money to invest in developing expertise in existing employees may make the cost, albeit
short-term, of cross-functionality too high (Carson 1985; Carson 1989; Carson 1995).
Research into the effectiveness of the development of external relationships, mainly with
agencies, is also dominated by studies of large firms (Duncan 1998; Low 2000). So, how
many SME's employ agencies, and of those that do, to what extent are they employed? That
is, do they handle all marketing communications, or merely one major or minor component?
The basic argument is that the development of relationships with external stakeholders may
provide relevance to SME's concerning issues of improving the efficiency and effectiveness
of messages, thus maximising marketing communications investment (Carson 1995, Duncan
1998).

Clearly, questions arise not only as to the validity of the ‘orchestration’ analogy, but also as to
the relevance for SME's. But who is to be the ‘bandleader’? and how you would conduct the
orchestra? (Fletcher 1998). This reflects well the challenges facing SME's. For example,
how many marketing communications tools do SME's use? Do SME's have the financial
resources to employ the appropriate tools? Do SME's have people with expertise in most or
all tools of the marketing communications mix? These questions not only underline the
challenges facing SME's, but also demonstrate the dearth of research into this area.

The Research Agenda

Research needs to be conducted to address the issue of ‘how can IMC improve the
management of marketing communications in SME's?’. This includes: what are the barriers to
implementation of IMC and the barriers to the improvement of marketing communications
generically? but it should also be stated that concurrent streams of research are required in
order to build greater understanding and improved theoretical contributions. Such research
although exploratory, will forward the debate on the intuitively appealing association between
IMC and improved business performance. Exploratory research in the form of case-studies
has been undertaken with 6 SMEs from product and service industries (NB ‘micro-
businesses’ have not been included). Cases were selected on their theoretical richness with
criteria for selection being that they actively engage in multiple marketing communications
activities, and also employ a marketing communications budget that warrants organisation or
management. This methodology has been extensively used in exploring similar issues and
problems in the SME context (Vescovi 2000, Walker Mack 2000 and Wijewardena 1999).
Research findings will be presented at the conference in December.

Conclusion

While Integrated Marketing Communications has been offered as a ‘panacea’ to the

improvement of the management of marketing communications, little research has been
undertaken to explore the relevancy of IMC to SME's. A discussion of IMC reveals questions
pertaining to the relevancy of specific IMC elements to the SME context, specifically the
implementation of elements such as planning and cross-functionality given the issues of
resource constraints and a lack of expertise. This not only underlines the scarcity of IMC
research at this level, but also questions the ability of IMC to overcome these issues or
barriers. Thus the question for research becomes how IMC can improve the management of
marketing communications.

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