Grant, Ken; Laney, Richard; Nasution, Hanny; Pickett, Bill; --- "The sum of sales - SME marketing" [2008] MonashBusRw 24; (2008) 4(2) Monash Business Review 18

The sum of sales
SME marketing

Research by Ken Grant, Richard Laney, Hanny Nasution and Bill Pickett shows how market and entrepreneurial orientation has a marked affect on a sales organisation’s performance.

The sales function becomes a dynamic source of value creation and innovation within the firm that operates in a turbulent business environment. Despite the growth in sales management research, it is still in an early stage; especially in developing the variables of salesforce performance and sales organisation effectiveness.

The aim of the study is to provide deeper insight into the differences in the levels of market orientation and entrepreneurial orientation, especially among small and medium-sized enterprises (SMEs). The data was collected from 77 SME managers across Australia. The results indicate that there are significant differences in aggregate market orientation and entrepreneurial orientation between the more effective SMEs (leaders) and the less-effective SMEs (laggards). The paper contributes towards sales knowledge by examining and highlighting the importance of market orientation and entrepreneurial orientation to achieving sales effectiveness in Australian SMEs.

The study sought to investigate the differences in all dimensions of sales organisation effectiveness, specifically market orientation and entrepreneurial orientation between leaders and laggards. The results indicate that the levels of all variables in the model (i.e. market orientation, entrepreneurial orientation, management control, salesforce characteristics, salesforce performance and sales organisation effectiveness) are superior for SMEs classified as leaders compared to those classified as laggards.

The two dimensions, market orientation and entrepreneurial orientation, have not been included in previous known SMEs research. Our prior research has identified that market orientation is an important driver of sales organisation effectiveness. This prior research has only been focused on samples of large corporations, whereas this study has focused on SMEs. This study provides a classification of the sales organisation effectiveness: leaders and laggards.

The importance of market orientation and entrepreneurial orientation on business performance has been widely recognised in the literature. It is argued that market orientation without an entrepreneurial spirit might only focus the organisation’s effort on a narrow perspective. Further, market orientation focusing on understanding latent needs is inherently entrepreneurial. One study suggests that “market orientation and entrepreneurial spirit provide the cultural foundation for organisational learning”; another highlights the view that entrepreneurial proclivity has a positive, direct and indirect relationship on market orientation. This paper is based on the framework shown in Figure 1, developed from our previous studies, in which the relationships among variables were investigated. The results suggest that market orientation has a strong direct relationship with management control and salesforce characteristics; and, is indirectly related to salesforce performance and sales organisation effectiveness. However, entrepreneurial orientation was not found to be an important driver of salesforce performance and sales organisation effectiveness.

Managerial implications

Based on the significantly different levels of market orientation and entrepreneurial orientation between leaders and laggards found in this research, managers are encouraged to develop and implement a market orientation and an entrepreneurial orientation climate in their organisation to enhance their salesforce performance.

A market oriented and entrepreneurial culture should be widely articulated and shared throughout the organisation and driven by management. Specifically in SMEs, salespeople and managers of SMEs need to be aware of both the customers’ expressed and customers’ latent needs for organisations (e.g. by frequently measuring customer satisfaction, and developing strategies driven by the need to create customer value).

Since sales people play an important role in dealing directly with customers, managers also need to encourage their salespeople to be more proactive in responding to the market, such as responding to competitors action and analysing competitor marketing programs. They should build good customer relations and be flexible and responsive to customer needs.

In addition, aspects of management control (e.g. monitor the day-to-day activities of salespeople) and salesforce characteristics (e.g. possess expert selling skills, also detailed product knowledge) must be investigated for those organisations wanting to improve their salesforce performance and subsequent sales organisation effectiveness.

The findings of this paper urge managers to improve the performance of the SMEs sales unit by developing both a market orientation and an entrepreneurial orientation. Also, managers should be constantly reviewing management control and salesforce characteristics.

Further research

Several specific limitations are acknowledged in this study. These limitations suggest that caution is needed in interpreting the findings but they also indicate a number of potential avenues for future research. As the sample was 77 SME managers across Australia, it is recognised that using such a number of respondents is a limitation. For example, the sample for leaders and laggards was only 15 for each classification.

Future research should be conducted to resolve the limitations of the present study. First, it would be beneficial to duplicate this study with a larger number of respondents and in a different context. Using a larger number of respondents and a different context, (e.g. in international or larger organisations) may possibly enrich the insights gained in this study. Second, using the concept of leaders and laggards developed in this study, it would be advantageous to replicate the study in order to develop specific and more comprehensive measures for leaders and laggards. In support for further research, S.F. Slater and J.C. Narver suggested in their 2000 article Intelligence Generation and Superior Customer Value in the Journal of the Academy of Marketing Science that the relationship between entrepreneurship and market orientation is an important area for further research.

Note: In this study, market orientation is defined as a business’s attempt to understand and to satisfy the expressed current and future customers’ expressed and latent needs; whereas entrepreneurial orientation is a process of enhancement of wealth through innovation and exploitation of opportunities, which requires the entrepreneurial characteristics of risk taking propensity, autonomy, and proactiveness.

To view this academic paper in full, see www.buseco.monash.edu.au/industry

Cite this article as

About the authors

Ken Grant

Department of Marketing, Monash University

Richard Laney

Department of Marketing, Monash University.

Hanny Nasution

Department of Marketing, Monash University.

Bill Pickett

Department of Marketing, Monash University.