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September 2013, Volume: II, Issue: IX

169

FACTORS AFFECTING SELECTION OF PROMOTIONAL MIX BY SMALL AND

MEDIUM SCALE INDUSTRIES IN COIMBATORE & PALAKKAD

1Dr.S.Franklin John, Professor& Principal, Nehru College of Management, Coimbatore

2Ms. R.Sheeja, Assistant Professor, Nehru College of Management, Coimbatore

ABSTRACT

The small and medium sector in Coimbatore and Palakkad has assumed greater importance as

the main employer of the displaced workforce, as well as being the main contributing sector to

the economy of our country. However many players in this sector do not seem to appreciate

critical role played by integrated marketing communication in getting their products to the

market .Due to the wrong selection of the promotional mix most of the quality products and

services are not fetching demand. Due to less demand the manufacturers are forced to sell the

products for a lesser cost. This leads to losses and shutdowns of the small medium enterprises.

By this study we are trying to find out the factors which influence the selection of the

promotional mix for these industries. End of the research we are planning to propose a

promotion mix modal which will be helpful for the small medium enterprises to promote their

product in the right and efficient manner.

Key words:- Small and medium enterprises, Promotional mix, advertisement Personal

selling.

Introduction

Rapid industrialization is considered as an engine of economic growth. Industrialization helps in

solving the large number of problems encountered by developing economies. But these

economies can not rely entirely on large scale industries for the industrial development due to

paucity of financial, technological and manpower resources. These economies have to depend on

small scale sector for speedy development of their economies. The problem of poverty,

inequality and unbalanced regional development can be abridged by expansion of small scale

units. This sector also contributes towards the growth of export in the country. It helps in solving

the problem of balance of payment in the economy. Small scale sector maintains better rapport

between employer and employees thereby maintaining better industrial relations in the economy.

Small scale sector requires less capital as compared to large scale units, can be started by new

generation of entrepreneurs. This sector can act as a nursery of entrepreneurship in the

developing economies.

Small business plays a central role in everyone's life because much of our day today economic

activities based on small business. It provides various service, professional practices and

merchandisers filling immediate needs of their customers and clients, so small business

contribute to the high quality of life that we enjoy. Small business enterprises have been


170

identified as an important strategic sector for promoting growth & social development of any

country. Over the years, small businesses have gained wide recognition as a major source of

employment, income generation, poverty alleviation & regional development. The small

business enterprises cover broad areas of economic activities such as manufacturing, service,

trading, professional services & others.

Small and Medium Scale Industries in India

Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant and dynamic

sector of the Indian economy over the last five decades. Small-scale industries have been playing

a momentous role in overall economic development of a country like India where millions of

people are unemployed or underemployed. Poverty and unemployment are two of the burning

problems of the country today. This sector solves these two problems through providing

immediate large-scale employment, with lower investments.

According to Dr. Manmohan Singh, “the key to our success in employment lies in the success of

manufacturing in the small scale sector1”. The economic development of any country primarily

depends upon the establishment of industries, which require sufficient amount of capital. In a

country like India, where capital is scarce and unemployment is wide spread, growth of small-

scale industries is vital in order to achieve balanced economic growth. The strength of small-

scale enterprises lies in their wide spread dispersal in rural, semi-urban and urban areas, fostering

entrepreneurial base, shorter gestation period, and equitable distribution of income and wealth.

Having recognized the significance of SSI sector, the Govt. of India has set up various

agencies and institutions at different levels-central, state and local, have been pursuing the policy

of protection and promotion of this sector since independence and also offered several incentives

and concessions for their promotion and development.

There are over 6000 products ranging from traditional to high-tech items, which are being

manufactured by the MSME sector in addition to provide wide range of services. The leading

industries with their respective shares are as depicted below:


171

Source: Ministry of MSMEs annual Report 2012-13

It is well known that the MSME provide the maximum opportunities for both self-employment

and jobs after agriculture sector. And MSMEs contributes a major percentage to the gross output.

Source: Ministry of MSMEs annual Report 2012-13

Growth of Small and Medium Enterprises in Tamil Nadu Especially in Coimbatore

Coimbatore is one among the industrially developed and commercially vibrant districts of Tamil

nadu. It has got high concentration of small scale industries and medium and large scale

industries. It is known as the Manchester of South India because of its well developed textile

industry and other industrial base. The third largest city of the state, Coimbatore, is one of the

most industrialized cities in Tamil Nadu, known as the textile capital of South India or the

Manchester of the South. The successful growth of cotton which served as a foundation for the

establishment of its famous textile industry. The first textile mills came as far back as 1888 but

there are now over a hundred mills. The result has been a strong economy and a reputation as

one of the greatest industrial cities in South India. There are more than 25,000 small, medium,

large sale industries and textile mill. Coimbatore is also famous for the manufacture of motor

pump sets and varied engineering goods. The development of Hydro electricity from the Pykara

Falls in the 1930 led to a cotton boom in Coimbatore.

Growth of Small and Medium Enterprises in Palakkad

Palakkad district the chief granary is often called the Gate way of Kerala lying at the foot of

Western Ghats, bordering the neighboring state of Tamil Nadu. Agriculture is the main

occupation of the people of the district. The Directorate of Industries and commerce (DIC) has

provided infrastructure facilities for small scale sector by acquiring land and developing it into

industrial area with all the facility. The Small Industries Corporation (SIDCO) is also providing

infrastructure facility for the small sector through 2 industrial estates and 3 mini industrial

estates. The units in these estates produce agricultural implements, ferrous castings, rubber

products, and cutleries, electronic and electrical products.

Promotion Mix


172

Most integrated marketing is deployed along the following functions of marketing used within

the organization: Advertising Tools - advertising management, advertising design: theoretical

frameworks and types of appeals; advertising design: message strategies and execution

frameworks; advertising media selection. Advertising also reinforces brand and firm image.

Promotional Tools - trade promotions; consumer promotions; personal selling, database

marketing, and customer relations management; public relations and sponsorship programs.

Integration Tools - Internet Marketing; Promotion mix for small business and entrepreneurial

ventures; evaluating and integrated marketing program. Reid, (2005).

Promotion is a process for managing customer relationships that drive brand value primarily

through communication efforts. Such efforts often include cross functional processes that create

and nourish profitable relationships with customers and other stakeholders by strategically

controlling or influencing all messages sent to these groups and encouraging data-driven,

purposeful dialog with them. Promotion includes the coordination and integration of all

marketing communication tools, avenues, and sources within a company into a seamless program

in order to maximize the impact on end users at a minimal cost. This integration affects all firms’

business-to-business, marketing channel, customer-focused, and internally directed

communications. Integrated Marketing Communications is a simple concept. It ensures that all

forms of communications and messages are carefully linked together.

Need for the Study

The small and medium sector in Coimbatore and Palakkad has assumed greater importance as

the main employer of the displaced workforce, as well as being the main contributing sector to

the economy of our country. However many players in this sector do not seem to appreciate

critical role played by integrated marketing communication in getting their products to the

market .Due to the wrong selection of the promotional mix most of the quality products and

services are not fetching demand. Due to less demand the manufacturers are forced to sell the

products for a lesser cost. This leads to losses and shutdowns of the small medium enterprises.

By this study we are trying to find out the factors which influence the selection of the

promotional mix for these industries. End of the research we are planning to propose a promotion

mix modal which will be helpful for the small medium enterprises to promote their product in the

right and efficient manner.

Limitations of the Study

The study covered only two percentage of the Small and Medium Enterprises situated across

Coimbatore and Palakkad. So the results cannot be generalized for the other Small and Medium

Enterprises of India. Due to lack of time we were unable to cover a larger sample.

Objectives

The objectives of the study are

1. To identify the factors influence the selection of promotional mix.


173

2. To study the most preferred promotional tools by.

Methodology

The structured questionnaire was developed after a detailed discussion with both academia and

industries from Coimbatore and Palakkad. From Coimbatore we have selected 70 industries after

careful investigation of their performance in the past 5 yrs. The companies which have turnover

below one crore are selected as samples. The same criteria have applied for the companies in

Palakkad and we have identified 30 companies which fall under. In Coimbatore we have selected

200 companies and in Palakkad we identified 50 companies where 70 companies in Coimbatore

and 30 companies in Palakkad were responded. The collected data was analyzed using

percentage analysis and one way ANOVA.

Analysis & Interpretation

Promotion Tools No: of respondents %

Advertising

Personal Selling

Sales Promotion

Direct Marketing

Public Relations

9

41

4

32

14

9%

41%

4%

32%

14%

Table 1. Frequency Table for the promotion tools based on its performance. Source: Primary data

Chart 1. Promotion tools based on its performance

From the table 1 and chart, it is inferred that 41% of the respondents prefer Personal selling, 32%

prefer Direct Marketing, 14% prefer Public Relations, 9% prefer Advertising and 4% prefer

Sales promotion as a tool for promotion.

9

414

32

14

promotion tools based on its performance

Advertising

Personal Selling

Sales Promotion

Direct Marketing

Public Relations


174

Analysis between State and Budget spend for promotion

Crosstab

Budget for Promotion from Sales

Total <5% 5-10% 10-15%

State Where the Sample is taken from

Kerala 18 9 3 30

Tamilnadu 34 26 10 70 Total 52 35 13 100

Table 2. Analysis between State and Budget spend for promotion Source: Primary data

Chart 2. Analysis between State and Budget spend for promotion. Source: Primary data

From the table 2 and chart 2, it is inferred that 53% the companies spend below 5% of the annual

sales towards promotion out which 18 belongs to Kerala and 34 belongs to Tamil Nadu. 35% of

the companies spend 5-10% out of which 9 belong to Kerala and 24 belong to Tamil Nadu. 13%

of the companies spend 10-15 % towards promotion out of which 3 belong to Kerala and 10

belong to Tamil Nadu.

Analysis between Qualification of the respondent and Budget for Promotion from Sales

Crosstab

Count


Total <5% 5-10% 10-15%

Qualification of the respondent

<SSLC 5 0 0 5

SSLC 0 9 4 13

Plus Two 10 0 4 14

Diploma 15 8 5 28

Graduation 22 14 0 36


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Post Graduation 0 4 0 4 Total 52 35 13 100

Table 3. Analysis between Qualification of the respondent and Budget for Promotion from Sales Source: Primary data

Chart 3. Analysis between Qualification of the respondent and Budget for Promotion from Sales

From the table 3 and chart 3 it is inferred that, out of 36 graduates 22 spends below 5% and 14

spends 5-10% of the sales towards promotion. Out of 28 diploma holders 15 spend below 5%, 8

spend 5-10% and 5 spend 10-15% of the sales towards promotion. Out of 14 respondents with

plus two 10 spend below 5%, 4 spend 10-15% of the sales towards promotion. Out of 13

respondents with SSLC 9 spend below 5-10% and 4 spend 10-15% of the sales towards

promotion. All the 5 respondents with below SSLC spend only below 5% of the sales towards

promotion and all the 4 post graduates spend 10-15% of the sales towards promotion.

Analysis between Type of Ownership and Budget for Promotion from Sales

Crosstab

Count


Total <5% 5-10% 10-15%

Type of Ownership Sole Propreitor 20 22 13 55

Partnership 17 13 0 30

Company 15 0 0 15 Total 52 35 13 100

Table 4. Analysis between Type of Ownership and Budget for Promotion from Sales Source: Primary data


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Chart 4. Analysis between Type of Ownership and Budget for Promotion from Sales Source: Primary data

From the table 4 and chart 4, it is inferred that out of 55 sole proprietorship firms, 20 spend

below 5%, 22 spend 5-10% and 13 spend 10-15% of the sales towards promotion. Out of 30

partnership firms, 17 spend below 5% and 13 spend 10-15% of the sales towards promotion. All

the 15 companies spend below 5% of the sales towards promotion.

One way ANOVA between Advertising and budget allocation for the promotion

H0 : Budget allocation will not influence selection of advertising as a promotional tool

Advertising N Mean SD F Sig

<5%

5-10%

10-15%

52

35

13

3.04

4.03

2.54

1.120

0.707

1.761

12.167 0.000

Table 5. One way ANOVA between Advertising and budget allocation for the promotion

There is a mean difference among spending level and advertisement. And small positive

variations in the standard deviation still we wants to confirm the significant variation in the

means. Hence one way analysis of variance test was performed. We got an F score of 12.167 and

significant value of 0.00. Since the calculated value is less than 0.05, we reject the null

hypothesis.


177

One way ANOVA between Personal selling and budget allocation for the promotion

H0 : Budget allocation will not influence selection of Personal selling as a promotional tool

Personal selling N Mean SD F Sig

<5%

5-10%

10-15%

52

35

13

2.17

2.46

3.38

1.438

1.221

0.58

4.663 0.012

Table 6. One way ANOVA between Personal selling and budget allocation for the promotion

There is a mean difference among spending level and Personal selling. And small variations in

the standard deviation still we wants to confirm the significant variation in the means. Hence one

way analysis of variance test was performed. We got an F score of 4.663 and significant value of

0.012. Since the calculated value is less than 0.05, we reject the null hypothesis.

One way ANOVA between Sales Promotion and budget allocation for the promotion

H0 : Budget allocation will not influence selection of Sales Promotion as a promotional tool

Sales Promotion N Mean SD F Sig

<5%

5-10%

10-15%

52

35

13

3.00

2.94

3.62

0.863

1.392

0.506

2.121 0.125

Table.7. One way ANOVA between Sales Promotion and budget allocation for the promotion

There is a mean difference among spending level and Sales promotion. And small variations in



0.00. Since the calculated value is greater than 0.05, we accept the null hypothesis.

One way ANOVA between Direct Marketing and budget allocation for the promotion

H0 : Budget allocation will not influence selection of Direct Marketing as a promotional tool

Direct Marketing N Mean SD F Sig

<5%

5-10%

10-15%

52

35

13

2.46

2.71

1.69

1.163

1.690

0.480

2.848 0.63

Table 8. One way ANOVA between Direct Marketing and budget allocation for the promotion


178

There is a mean difference among spending level and direct marketing. And small variations in



0.63. Since the calculated value is greater than 0.05, we accept the null hypothesis.

One way ANOVA between Public Relations and budget allocation for the promotion

H0 : Budget allocation will not influence selection of Public Relations as a promotional tool

Public Relations N Mean SD F Sig

<5%

5-10%

10-15%

52

35

13

4.42

2.86

3.77

1.273

1.417

1.922

12.742 0.000

Table. 9. One way ANOVA between Public Relations and budget allocation for the promotion

There is a mean difference among spending level and public relations. And small positive

variations in the standard deviation still we wants to confirm the significant variation in the

means. Hence one way analysis of variance test was performed. We got an F score of 12.742 and

significant value of 0.00. Since the calculated value is less than 0.05, we reject the null

hypothesis.

INTERPRETATION AND DISCUSSION

From the above analysis and interpretations and the help of the literature review, we form the

following discussions to understand why this results has occurred.

Most of the SMEs prefer personal selling as their promotional tool. It is followed by

direct marketing, public relations, advertisement and sales promotions. We can

understand from the literatures sales promotion and advertisement may not be convenient

and suitable promotional tool because of their huge cost involvement. They prefer

personal selling their customers are limited and the manufacture the products to the

requirement of the customer. Direct marketing helps SMEs to create a one to one

relationship to promote their products.

Most of the SMEs spend very little amount towards the promotion of their products. In

that when we compare state of Tamil Nadu and Kerala, the SMEs in Kerala spends

proportionately small amount towards promotions. In the state of Tamil Nadu the median

range SMEs allocate considerably spend significant amount towards promotional mix.

The budget allocation towards promotion and proprietor’s educational qualification has

no significant relationship. From the analysis the proprietors of SMEs allocate the same

amount of money towards promotional budget invariably of their educational

qualification. We can infer as educational qualification increases there is a negative trend

creates towards budget allocation for promotion.


179

The SMEs owned by sole proprietors spend more money towards promotional budget

followed by SMEs of partnership tie and SMES of LTD. We can understand that SMEs

owned by sole proprietor has a freedom to take decision on their own.

From the analysis and interpretation, we can understand that there is a strong influence on

selection of promotional tools and budget allocation in SMEs. Selection of advertising,

personal selling and Public Relations highly influenced by the budget constraints.

CONCLUSION

From above discussion and literature review we can understand the pattern of selection of

promotion mix among SMEs in Coimbatore and Palakkad. Due to stiff competition, SMEs make

marginal profit other than specialized products. From the discussion with the proprietors of

SMEs and from the data analysis we understand that they prefer personal selling as their

desirable promotional tool. Out of research experience we suggest SMEs to hold press meet

about their products followed by a sales promotion. This will create awareness among their

targeted customers then they have a well trained sales force to end the sale. This promotional

mix is the most cost effective and suitable for SME sector in India.

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