Marketing in Entrepreneurial Ventures Versus Established Companies

Introduction

An entrepreneur may be defined as an individual or a person who uses innovations, capital and his business skills in order to “…transform (those) innovations into economic goods and services” (Sheth, 2011: p34). The efforts of such an individual may give rise to a new business venture or – in the case of an established business organization – result in business revitalisation. Entrepreneurship may be a response to an opportunity such as a new technological innovation that is regarded as a potential source of business prosperity.

According to Kotler & Keller (2008), the most common type of entrepreneurship is that which involves the establishment of a new business venture. Such a business is referred to as a start-up company and is significantly different from an established business firm. Over the years, however, entrepreneurship as a concept has expanded to incorporate social as well as political ventures.

The fact that a start-up company is the most common form of entrepreneurship does not negate entrepreneurship in established companies or business organizations. Kikuchi (2010) opines that entrepreneurship can also be found in these organizations. Intra-preneurship is the term that is commonly used to differentiate entrepreneurial activities in an established firm from those in a start-up company (Kikuchi, 2010). Such activities may involve corporate ventures characterized by the establishment of new businesses by large organizations. An example of this is when a multinational company enters into a partnership with a small company overseas.

Entrepreneurship is not a static phenomenon frozen in time and space. Rather, it is a dynamic phenomenon that varies. To underscore this point, Biederman (2011) argues that entrepreneurial undertakings vary depending on the form of organization and the level of creativity. This means that the form of activities that will be taking place in a small start-up company that has not yet embraced technology are significantly different from those taking place in a larger start-up company that has incorporated technology in its operations.

The sophistication of entrepreneurship also varies depending on the resources allocated to the venture. There are start-up companies that can be conceptualized as “solo projects” (Jaworski, 2011: p. 34) whereby the entrepreneur may be involved in the provision of goods and services as a small company. Such a solo project is undertaken single-handedly by the entrepreneur with little or no help from other people. This venture contrasts sharply with a major entrepreneurial venture that creates many job opportunities. An example of this is a highly sophisticated business venture that draws upon the expertise of many people from different fields.

Start-up companies are significantly different from established companies that are operating within the same industry. According to Naughton (2011), there are obvious situational differences that demand different approaches as far as the conduct of business is concerned. For example, start-up companies have a built-in competitive disadvantage given the fact that they are not yet well-established to compete with those companies that have been in the market for many years.

One difference between start-up companies and well-established businesses is in the funding of their operations. Small companies are characterized by modest profits and rarely emerge as huge moneymakers (Chase, 2011). By contrast, highly profitable well-established companies can be self-funded through their retained earnings (the percentage of net earnings retained by the company to be reinvested in its core business.) In addition, start-up companies usually face challenges when seeking credit. Unlike large companies that have easier access to credit from financial organizations, start-up companies lack a credit history and thus banks and other lending institutions view them with a great deal of skepticism (Kikuchi, 2010).

Marketing is perhaps one of the most significant differences between start-up companies and well-established business ventures. Start-up companies face several challenges when it comes to marketing as compared to their well-established counterparts. Potential customers are not aware of the existence of the products and services offered by start-up companies. Even if the potential customers are aware of these products and services, the start-up companies have not yet proved the quality of their offerings.

Another marketing challenge facing start-up companies is the fact that the companies face a challenge in creating a viable market entry strategy. In cases where start-up companies are able to establish such an entry, maintaining and sustaining the foothold in the market can prove to be a daunting task.

This research was carried out against this backdrop. The study examined the differences between the types of marketing strategies that are adopted by entrepreneurial firms and those by well-established firms.

Chapter organization

In this chapter, the reader will be introduced to the study through a description of some of the highlights of the research. The highlights include background information, problem statement, research questions, scope and limitations of the study, assumptions made in the study as well as the significance of the findings of this study. The aim was to provide the reader with an overview of this research study.

Problem Statement

The term marketing has been defined variously by different authors in this field. For example, Kotler & Keller (2008) view marketing as the process which involves “identifying and meeting human and social needs” (p. 5). The human needs that the scholars are referring to in this case include the desire for certain services and products.

Kerin, Hartley & Rudelius (2008) define marketing as the “process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives” (p. 672). Such objectives may include achieving sales and revenue targets. The exchanges to which the scholars refer may include the market of goods and services between the business organization and the customers.

Scholars such as Bearden, Ingram & LaForge (2005) have defined marketing as a societal process. According to them, marketing is a societal process that “…facilitates the flow of goods and services from producers to consumers in a society” (Bearden et al., 2005: p. 7). Identifying and addressing the needs of the consumers facilitates this flow. To this end, this definition coincides with that of Kotler & Keller (2008).

From this review, it is clear that marketing is both a process and a phenomenon. Marketing comprises the cumulative whole of the experiences of potential customers through their interaction with the company, the employees of that company and the consumers targeted by the marketing strategy. It also includes those individuals who are beyond the targeted consumers but who are nonetheless exposed to the marketing communications of the company wielding the campaign.

Both start-up companies and well-established firms must develop and implement strategies and practices aimed at achieving marketing objectives. The latter is structured to support the overall goals and objectives of the business (Sheth, 2011).

Marketing can also be viewed as an interactive process. To this end, the experiences of the company are important as they help in shaping the strategies and practices to be adopted. Entrepreneurial ventures tend to be short on such experiences. This is true given the fact that such ventures have been in the market for a shorter time than their well-established counterparts.

The interaction between the consumers and the company is also very important. Cherney & Kotler (2009) stated that the consumers judge a company based on their interaction with the employees as well as on their experiences with the products and services of the company. The short duration within which the start-up company has been operating in a given market segment makes this interaction another daunting task for the marketing team.

Scholars such as Sheth (2011) indicate that the selection of a given marketing strategy is greatly influenced by the lifecycles of the companies, products and industries. Four lifecycle stages are generally recognized for companies, products and industries are concerned. The four stages are introduction, growth, maturity and decline. These four stages are further examined in the next chapter.

Definition of Terms

Certain terms used in this study will be defined in this section. The meaning of the terms in the context of this study may be subtly different from their everyday usage. The definitions provided below describe how the terms have been applied in this study:

Technology

In this paper, the term “technology” will be used with reference to the technology sector. This sector includes firms that are engaged in the production and distribution of goods and services that are related to “electronics”, “software”, “computer hardware and peripherals” and “information technology”. The term “technology sub-sector” will be used in this study in reference to firms involved in “electronics”, “software”, “computers (computer hardware and peripherals)” and “information technology”.

Firm Status

The term “firm status” will be used in this study to differentiate between entrepreneurial and well-established firms. The term will be used to identify the category within which a given company falls.

Entrepreneurial Firm

For the purpose of this study, an entrepreneurial firm will be defined as a firm that has filed an Initial Public Offering (herein referred to as IPO) and which is less than 10 years old.

Well-established Firms

The term “well-established firms” refers to firms that have been in business for 10 or more years.

Lifecycle Stage(s)

The term “lifecycle stages” will be used to refer to the age of the organization. It is a reference to the stage in the development cycle within which a given firm falls. Four lifecycle stages were identified for this study. These were introductory, growth, maturity and decline.

Research Questions

As in the case of research objectives, this study had one major research question and five specific research questions. Research questions are related to research objectives. By answering the research questions, this research will have effectively addressed the objectives of the study. The following are the research questions for this study:

Major Research Question

What are the differences between the types of overarching business strategies adopted by entrepreneurial and well-established firms in the technology sector?

Specific Research Questions

1. How do entrepreneurial firms differ from well-established firms in the technology sector with respect to the type of overarching marketing strategy selected?
2. How do entrepreneurial firms differ from one another with respect to the type of overarching marketing strategy selected when controlled for the technology sub-sector?
3. How do well-established firms differ from one another with respect to the type of overarching marketing strategy selected when controlled for the technology sub-sector?
4. How do entrepreneurial firms differ from well-established firms with respect to the type of overarching marketing strategy selected on a sub-sector by sub-sector basis?
5. What is the difference between entrepreneurial firms and well-established firms in the technology sector as far as the use of social media marketing is concerned when controlled for the technology subsector?

Scope and Limitations of the Study

To address all aspects of a given topic in a given field in one study is not humanly possible. Consequently, boundaries were established within which the study was conducted. Following are the limitations and scope of the study:

1. The research was limited to the technology sector alone. This is despite the fact that there are differences between marketing strategies adopted by start-ups and well-established firms in other sectors
2. The study was limited to the differences in the overarching marketing strategies used by start-up companies and well-established firms. This is despite the fact that there are other differences (e.g., recruitment of staff, organizational culture) that are discernible between start-up companies and well-established firms
3. The study used IPO criteria to select start-up companies. Start-up companies in the technology sector that have not issued IPOs were not included in the study

Significance of the Study

1. The findings of this study will significantly contribute to the knowledge base in this field
2. The findings will help marketers and other stakeholders in the technology sector appreciate the differences between start-up companies’ and well-established firms’ marketing strategies
3. The findings will also help marketers and other stakeholders in the sector appreciate the importance of adopting overarching marketing strategies that are appropriate to the position of the firm in the development lifecycle stages.

Literature Review

Introduction

In chapter one, we highlighted several aspects of the study in an effort to provide the reader with a picture of what to expect from the rest of the paper. In this chapter, we will provide the reader with a critical analysis and review of literature in this field. The aim is to review the literature as it pertains to a firm’s lifecycle and social media marketing. In this chapter, we will discuss, among others, the firm’s lifecycle, the use of social media marketing, and a review of the IPO concept.

By reviewing existing literature, we are able to identify agreements and disagreements among various schools of thought. We are also able to identify knowledge gaps in the field – gaps that can be filled by conducting further studies. The literature review also helps us avoid duplicating studies that have been conducted in the past.

Firm’s Lifecycle Model

According to researchers in the field of the organizational lifecycle, business organizations are said to progress through a “…fairly predictable sequence (of) developmental stages” (Andrew, 2011: p.23). The growth of a business firm according to these theorists is not different from that of a living organism. Business organizations are similar to living organisms given that they depict a regular and fairly predictable developmental process.

Bearden et al. (2005) state that business organizations that depict such predictable developmental patterns are greatly affected by both external (e.g., competition, supply of materials) and internal (e.g., organizational culture) factors.

Following are the four stages in the firm lifecycle:

• Introduction. At this stage, the size of the firm, the market as well as the revenues is usually small (Jaworski, 2011). The firm encounters little or no competition, especially in a new market. The major objective of the management team at this stage is to create a niche in the market and spur consumer demand for the products or services of the start-up company (Chandrasekaran & Tellis, 2011).Various factors should be considered in order to successfully steer a start-up through this stage. Among them are:
  • Product or Service Development. A great deal of research and development is involved at this stage. The new product or service is fine-tuned depending on the desires expressed by the customer. Management has to determine the features and qualities of such a product or service. In other words, the management has to determine those features of the product that give it a competitive edge over others in the market and work on it. For example, if the management realizes that it is the texture of the product that sets it apart from others in the market, they may carry out research and development to improve on this.
  • Pricing. Management has to determine the pricing strategy to be used. A penetration or a skimming pricing strategy may be among those selected (Kerin, Hartley & Rudelius, 2008). A skimming pricing strategy is preferable in situations where competition is non-existent or very low (Spencer, 2011). On the other hand, penetration pricing is preferable when the management realizes that there is a lot of competition in the market. The aim of this form of pricing is to make it possible for the company to penetrate the market which is already dominated by other products or services.
  • Distribution. Management has to devise distribution strategies for their products or services. Distributors are identified to ensure the product reaches the target consumer. This is a very important aspect in the introduction phase given the fact that the company needs to avail the products or services to customers who have never used them before. The logistics involved in the distribution process will determine the availability of the product to the consumers.
  • Promotion.Publicity and advertisements are utilized at this stage. The aim here is to create awareness and spur demand or interest in the new product (Malar, Krohmer, Hoyer & Nyffenegger, 2011). The target here is the early adopters of the new product or service being offered. The marketers aim at educating the potential consumers on the benefits of the new product or service. This is critical in the introduction phase given the fact that the early adopters of the product will form the future clientele base for the company.
• Growth. The growth stage is heavily influenced by the activity that occurs during the introductory phase. According to Biederman (2011), if the firm is able to create awareness among the consumers and spur demand for the product or service, then rapid growth is likely to occur. At this stage, the major aim of the management is to establish consumer loyalty as well as increase market shares (Malar et al., 2011). At this stage, the profits of the firm are determined to a large extent by the increase in sales volume (Spencer, 2011). On its part, sales volume increases as a result of a growth in market share and the expansion of the market as a whole (Malar et al., 2011). The profits may also be influenced positively by the reduction in costs as a result of economies of scale. This is together with market prices that are favorable to the new product. As in the case of the introduction stage, several aspects have to be considered at this stage:
  • improving the quality of the new product by incorporating new features;
  • increasing the prices in cases where there is high consumer demand (Cherney & Kotler, 2009); and
  • distribution and promotion of the new product.
• Maturity. The growth of the firm in terms of sales tapers off at this stage (Naughton, 2011). The sales volume also tapers off and stabilizes. The ability to make profits is greatest at this stage than at any other stage in the lifecycle. It is noted that the sales growth may drop to zero or even negative at this stage. However, the profits of the firm may actually grow. This is especially so in capital-intensive industries given that further investments to add or maintain assets are not needed at this stage. The major aim of management at this point is to safeguard the market share established from the earlier stages while simultaneously maximizing profits (Spencer, 2011). Marketing is also crucial for the firm at this stage. The brand has to be differentiated from similar products in the market in order to maintain its market share (Pindado, Queiroz & Torre, 2010). The firm has to compete with other brands in the market and this may lead to drops in prices.
• Decline. According to lifecycle theorists, this is the last stage in the development of any given firm. Profits deteriorate and the firm needs to develop strategies to address this in order to survive. The strategies may include the addition of new features in its products to attract consumers. The firm may also opt to divest and discontinue production if the fall in profits cannot be stemmed. Marketing is also a critical aspect at this stage depending on the strategy adopted by management. If management has opted to discontinue, then marketing is not needed. However, if the firm has opted for rebranding, then marketing is vital (Spencer, 2011).

Using Social Media in Marketing

Social media marketing is fast gaining popularity in the marketing field today. According to Chase (2011), it involves the process of establishing website traffic and attention via social media sites such as Facebook, Twitter among others. A social media marketing strategy aims at creating content that is capable of attracting the attention of users of social media. The users share the content with other people in the social network. This is for example when people share links to products advertised online with their friends on Facebook.

Messages or information regarding a product are shared between users of the social media site. The messages appeal more to the target consumers given the fact that they appear to come from a third party rather than the producer. The third party is viewed as unbiased and as such, easy to trust.

Chase (2011) noted that the use of social media in marketing creates value for a company that goes beyond the creation of value through the traditional practice of marketing. According to Chase (2011), no longer does contact between consumer and marketer ends with the completion of a sale or the rejection of a sale. Social media allows companies and consumers to maintain contact beyond the transactional process. In this way, companies can become “value generators” for consumers by providing useful information that consumers can apply in the creation of benefits for themselves through marketing interactions that do not involve the marketer providing the information (Chase, 2011: p. 4). Chase (2011) justified this approach by arguing that such behavior on the part of the marketer establishes “high-value relationships” with existing and prospective customers. It also generates additional business for the marketing company (Chase, 2011: p. 5).

Malar et al. (2011) emphasized the effectiveness of social media in building brand loyalty. According to these authors, the use of social media in marketing allows the “…consumers the opportunity to contribute to a brand’s personality” (Malar et al., 2011: p. 46) through collaborative interactions with marketing managers.

Sheth (2011) found that the use of social media in marketing is especially useful for start-up companies. Start-up companies stand to benefit from the use of social media in their marketing efforts for several reasons. The major reason is the fact that social media does not require a financial investment. Social media marketing is driven by word of mouth as opposed to paid-for marketing campaigns. Most start-up companies may find themselves cash-strapped and as such, the use of social media marketing will reduce their costs.

It is also easy for the start-up company to use social media in marketing. All the company needs is access to the internet. This means that there is no need for detailed marketing campaigns which may require a lot of logistics which the start-up company may not be able to come up with.

There are several benefits of social media marketing to the start-up company. The first is the ability to become noticed by the consumers and other stakeholders. The second is the ability to create expectations on the part of the consumers and finally, to develop a customer base (Biederman, 2011; Sheth, 2011).

However, it is important to note that as much as social media marketing is beneficial to both well-established and start-up companies, it is not all firms that make use of it. A firm may fail to make use of social media marketing for several reasons. For example, the firm may be unaware of the potential benefits of the media, or if aware of them, may ignore them altogether.

Naughton (2011) points out that a failure to use social media in marketing in the current social environment means that a marketing company is overlooking a substantial share of the market. Start-up companies cannot afford to overlook any potential customers.

Biederman (2011) discovered that Twitter is especially beneficial for “companies targeting the mobile workforce” (p. 32). Jaworski (2011) found that well-established companies will more often than not require the development of a substantial body of research over time (p. 215) before such companies “eventually reach a ‘tipping point’” that will lead to the use of social media in marketing (p. 215). This is especially true of companies whose management is “risk-averse”.

Review of the IPO Concept

An IPO is an equity stocks issue that is offered when a company first initiates public trading of its shares. By this point, the company will have already incorporated and had shareholders. The shares in the company, however, will be privately held (Connelly et al., 2010).

To prepare for the launch of an IPO, a company must determine its valuation. The valuation process for new private companies occurs in two phases. The first phase is the pricing evaluation. The objective of this phase is to determine the initial offering price for shares in the newly public company. The second phase is the market evaluation. The results of this phase reflect the actual worth of the new company based on the market’s response to the company’s IPO (Pindado et al., 2010).

Investors are interested in IPOs because they frequently provide an opportunity to benefit from a rapid escalation in market price. Over a longer time span, however, the probability of less spectacular price performance is common. Some IPOs are intentionally underpriced to stimulate interest from investors (Schneider & Valenti, 2010). The market price for average IPOs increase in the range of 15-to-20 percent over the initial two weeks of trading activity.

A company preparing to launch an IPO must enter into a contractual arrangement with a brokerage firm. Brokers consider several factors in both the setting of an IPO price and in the evaluation of an IPO price (Xiong, Zhou & Varshney, 2010). A traditional model applied to the pricing of an IPO is the comparable-firm approach (Connelly et al., 2010).

Research Methodology

Introduction

The steps that were followed in collecting and analyzing data for this research are described and explained in this chapter. As already indicated in chapter 1 of this paper, the study has a two-fold objective. First, the issue is to determine if (and if so how) entrepreneurial firms differ from well-established firms in the technology sector with respect to the type of overarching marketing strategy within which their products (goods and/or services) are promoted to their target markets. Second, the issue is to interpret the meaning of any variations that are identified in order to improve the understanding of how the stage of the life cycle of firms in the technology sector affects the choice of the type of overarching marketing strategy adopted by a firm.

The description and the explanation of the research methodology that was followed in the conduct of this study are presented in separate but related discussions. We begin with a description of the marketing strategies, research design, and a statement of the research hypotheses that were investigated. The remaining discussions are research sample, data collection, data analysis and methodological limitations.

Marketing Strategies

This research identified five marketing strategies. These are as explained below:

• Low Cost. Adapted from Porter’s (Porter, 2012) combination of the broad market scope and low-cost competency, the firm uses comparatively reduced prices to attract customers in a competitive market.
• Broad Differentiation. Adapted from Porter’s combination of the broad market scope and unique competency, a firm uses a unique aspect of its product to differentiate from similar products in the competitive technology market.
• Best Price. This strategy was used to describe those firms which were seen to combine high quality in their products and a relatively fair price to attract their clients. The price in this case was not the lowest in the market. However, the quality of the product was seen to be much higher than the price attached to the product by the firm hence ‘best price’.
• Focused Niche- Low Cost. This strategy adopts Porter’s combination of the narrow market scope and low-cost competency.
• Focused Niche Differentiation. This strategy adopts Porter’s combination of the narrow market scope and unique competency.

Research Design

This study focused on the selection of an overarching marketing strategy by firms in the technology sector. The dependent variable for the study was the overarching marketing strategy selected. Independent variables were firm status and technology sub-sector.

As already indicated earlier in this paper, this research recognized the fact that firms go through four stages in their life cycle. These stages are introduction, growth, maturity and decline. Different marketing strategies are appropriate to a firm depending on the location of the firm in the life cycle (Chandrasekaran & Tellis, 2011; Englen, et. al 2010; Kikuchi, 2010). For the purposes of this study, it was assumed that entrepreneurial firms were either in their introductory or growth stages. On the other hand, it was assumed that the well-established firms were in their growth, maturity or decline stages.

Determination of the stage at which a firm is located for the entrepreneurial firms used in this study was partly informed by the age of the firm at the time of IPO filing and in part by the revenue patterns over time. It is a myth that all firms issuing IPOs have been established recently at the time of filing for the IPO. According to Ritter (2011), the median age of firms issuing IPOs in the year 2010 was 10 years.

In addition to the comparisons made between entrepreneurial firms and well-established firms at the macro level of this study, additional comparisons were also made. Within the entrepreneurial group and within the well-established group, comparisons were made between sub-sectors. Within each technology sub-sector, comparisons were made between entrepreneurial firms and well-established firms.

Research Hypotheses

This research formulated hypotheses for each of the five research questions. There were both null and alternative hypotheses for the research questions. The research hypotheses that were tested together with a restatement of the associated research questions were as follows:

Research Question 1

How do entrepreneurial firms differ from well-established firms with respect to the type of overarching marketing strategy selected?

• Null hypothesis: There are no significant variations in the type of overarching marketing strategy selected between entrepreneurial and well-established firms.
• Alternative hypothesis: There are significant variations in the type of overarching marketing strategy selected between entrepreneurial and well-established firms.

Research Question 2

How do entrepreneurial firms differ from one another with respect to the type of overarching marketing strategy selected when controlled for the technology sub-sector?

• Null hypothesis: There are no significant variations in the type of overarching marketing strategy selected between entrepreneurial firms when controlled for the technology sub-sector.
• Alternative hypothesis: There are significant variations in the type of overarching marketing strategy selected by entrepreneurial firms when controlled for the technology sub-sector.

Research Question 3

How do well-established firms differ from one another with respect to the type of overarching marketing strategy selected when controlled for the technology sub-sector?

• Null hypothesis: There are no significant variations in the type of overarching marketing strategy selected between well-established firms when controlled for the technology sub-sector.
• Alternative hypothesis: There are significant variations in the type of overarching marketing strategy selected between well-established firms when controlled for the technology sub-sector.

Research Question 4

How do entrepreneurial firms differ from well-established firms with respect to the type of overarching marketing strategy selected on a sub-sector by sub-sector basis? Separate hypotheses were tested for each technology sub-sector. The general structure of the hypotheses related to this research question is as follows:

• Null hypothesis: There are no significant variations in the type of overarching marketing strategy selected between entrepreneurial firms and well-established firms within this technology subsector.
• Alternative hypothesis: There are significant variations in the type of overarching marketing strategy selected between entrepreneurial firms and well-established firms within this technology subsector.

Research Question 5

What is the difference between entrepreneurial firms and well-established firms in the technology sector as far as the use of social media marketing is concerned?

• Null hypothesis: There are no significant differences between entrepreneurial firms and well-established firms in the technology sector as far as the use of social media marketing is concerned.
• Alternative hypothesis: There are significant variations between entrepreneurial firms and well-established firms in the technology sector as far as the use of social media marketing is concerned.

Research Sample

The research sample was selected in two clusters. The first cluster contained only entrepreneurial firms while the second cluster contained only well-established firms. The sample for the entrepreneurial cluster was selected from the population of firms filing IPOs from 2001-2010. Those firms identified as technology sector firms by Renaissance Capital were selected for the research sample. A total of 289 IPO firms were selected for the entrepreneurial cluster of the research sample. The distribution of entrepreneurial firms by technology sub-sector that are included in the research sample is illustrated in Exhibit 3.1 and in Exhibit 3.2.

Exhibit 3.1: Distribution of Entrepreneurial Firms by Technology Sub-Sector – Tabulation

The selection of firms for the well-established cluster of the research sample was carried out using the population of firms listed in the technology sector by Renaissance Capital as the guide. The well-established firms were randomly selected from the internet using the Google search engine. The researcher searched for those technological firms that were more than 10 years old. In this instance, random selection procedures were applied to select firms by technology sub-sector in numbers equal to the industry focus sub-sectors in the entrepreneurial cluster. Thus, the distributions of firms in both the entrepreneurial cluster and in the well-established cluster of the research sample with respect to industry focus are identical.

Data Collection

In addition to the identification of the industry focus of the firms included in the research sample for this study, additional data was required with respect to the types of overarching marketing strategy that was selected by each firm. This information was developed through a review of companies’ annual reports and websites. From the annual reports and the company websites, the researcher was able to glean information that was to be used in identifying the overarching or dominant marketing strategy used by the company. It is important to note that the companies to be used as the sample for this study had already been identified at this stage. They had already been categorized into well-established and start-up firms. As such, the researcher just needed to review the annual reports and the websites of the companies to determine the overarching marketing strategy used by the firm. In the case of social media marketing, the same was applied. The researcher accessed the websites of the companies to determine the use of social media services in marketing.

The distribution with respect to the type of overarching marketing strategy selected for the total sample of 578 firms is illustrated in Exhibits 3.3 and 3.4 below.

Exhibit 3.3: Distribution of Firms in Total Sample by Type of Overarching Marketing Strategy Selected – Tabulation

Data Analysis

A mix of data analysis procedures was applied in the testing of the hypotheses for this study.

Cross-Tabulation Analysis: Chi-Square

Cross-tabulation analysis which included the application of chi-square analysis was included. Chi-square analysis was also applied independently in addition to its use in the cross-tabulation analysis.

A chi-square test can be conceptualized as a form of statistical test for a hypothesis. In this case, the distribution of the sampling can be considered as chi-squared in nature if the null hypothesis is not rejected. Pearson’s chi-square test is the most popular and it is the one that was used for this study. This form of chi-square test is also referred to as the chi-square goodness of fit test or test for independence.

The chi-square test in this study will be used to compare the actual data obtained from what was expected according to the null hypothesis formulated for each of the research questions. If the data observed is different from what was expected, the chi-square test will be used to determine whether the difference was a result of chance or was due to other factors.

Analysis of Variance (ANOVA)

Analysis of variance (ANOVA) procedures also was applied in tests of statistical significance. In all instances where determinations of statistical significance were made, the criterion for significance in this study was a probability level less than five percent (p<0.05).

ANOVA can be conceptualized as a set of statistical models together with their procedures. Here, the observed variance in a given variable is separated into different components associated with varying sources of the variance. In this study, the ANOVA was used as a statistical test to determine whether or not the means of varying categories are the same. This will enable the researcher to generalize the t-test to the various categories.

The study will use the p-value to determine statistical significance between the various categories. A lower p-value was used as an indication of a significant difference between the various categories. For example, a p-value of less than 0.05 in this study was interpreted as an indication of the fact that a significant difference exists.

Methodological Limitations

An important limitation of the research methodology used for this study was the subjective assessment by the researcher of data information extracted from the companies’ annual reports and websites. The data was subjectively used in order to determine the types of overarching marketing strategies that were selected by the firms included in the research sample selected for this study. However, every effort was made to ensure valid determinations. The selection of all the IPO firms included in the Renaissance Capital IPO database for technology firms for the entrepreneurial cluster together with the randomized selection of firms for the well-established cluster of the research sample was meant to improve the generalisability of the findings of this study. The findings can be generalized to all firms in the populations from which the firms in the sample clusters were selected with a measure of accuracy.

Findings

Introduction

The results of the research analyses that were performed for this study are presented in this chapter. Each section of this chapter presents the results that are specific to the research question and by hypothesis. In some instances, multiple hypotheses were tested in relation to a single research question. Research questions and hypotheses are restated at the beginning of each results section in this chapter.

Research Results

Results Related to Research Question 1

Research question 1 asked: How do entrepreneurial firms differ from well-established firms in the technology sector with respect to the type of overarching marketing strategy selected? One hypothesis was tested in relation to this research question. The null and alternative hypotheses are as follows:

• Null hypothesis: There are no significant variations in the type of overarching marketing strategy selected between entrepreneurial and well-established firms.
• Alternative hypothesis: There are significant variations in the type of overarching marketing strategy selected between entrepreneurial and well-established firms.

The results of the cross-tabulation analysis are presented in Exhibit 4.1. As the data presented in the cross-tabulation table indicate, the distribution across marketing strategy alternatives for the entrepreneurial group (IPOs) is significantly different from that of the well-established companies’ group. The comparative distributions are illustrated in Exhibit 4.2. The statistical significance of the variations between entrepreneurial firms and well-established firms in relation to the overarching marketing strategy selected was tested through the application of chi-square analysis. The chi-square analysis results are summarized in Exhibit 4.3. As the data presented in Exhibit 4.3 indicate, the differences between entrepreneurial firms and well-established firms in the distribution patterns related to marketing strategy types were statistically significant at p<0.05 (chi-square = 16.734; df = 4; significance = 0.001.

Exhibit 4.1: Cross Tabulation- Company Group by Marketing Strategy

Exhibit 4.3: chi-square Results- Company Group by Marketing Strategy chi-square Tests

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 38.87.

Results Related to Research Question 2

Research question 2 asked: How do entrepreneurial firms differ from one another with respect to the type of overarching marketing strategy selected when controlled for technology sub-sector? One hypothesis was tested in relation to this research question. The null and alternative forms of the hypotheses are as follows:

• Null hypothesis: There are no significant variations in the type of overarching marketing strategy selected between entrepreneurial firms when controlled for the technology subsector.
• Alternative hypothesis: There are significant variations in the type of overarching marketing strategy selected between entrepreneurial firms when controlled for the technology subsector.

The results of the cross-tabulation analysis are presented in Exhibit 4.4. As the data presented in the cross-tabulation table indicate, the distributions across marketing strategy alternatives for the different technology sub-sectors within the entrepreneurial group (IPOs) are quite different from one another. The comparative distributions are illustrated in Exhibit 4.5. The statistical significance of the variations among entrepreneurial firms with respect to the associations between technology sub-sector and marketing strategy type was tested through the application of chi-square analysis. The chi-square analysis results are summarized in Exhibit 4.6. As the data presented in Exhibit 4.6 indicate, the differences among entrepreneurial firms in relation to the association between marketing strategy type and technology sub-sector were statistically significant at p<0.05 (chi-square = 27.609; df = 16; significance = 0.037).

Exhibit 4.4: Cross Tabulation Analysis- Entrepreneurial Firms Marketing Strategy Types by Technology Sector Industry Focus

Exhibit 4.6: chi-square Results- Marketing Strategy by Technology Sub-Sector among Entrepreneurial Firms. Chi-Square Tests

Results Related to Research Question 3

Research question 3 asked: How do well-established firms differ from one another with respect to the type of overarching marketing strategy selected when controlled for technology sub-sector? One hypothesis was tested in relation to this research question. The null and alternative forms of the hypothesis are as follows:

• Null hypothesis: There are no significant variations in the type of overarching marketing strategy selected between well-established firms when controlled for the technology subsector.
• Alternative hypothesis: There are significant variations in the type of overarching marketing strategy selected between well-established firms when controlled for the technology subsector.

The results of the cross-tabulation analysis are presented in Exhibit 4.7. As the data presented in the cross-tabulation table indicate, the distributions across marketing strategy alternatives for the different technology sub-sectors within the well-established group are quite different from one another. The comparative distributions are illustrated in Exhibit 4.8. The statistical significance of the variations among entrepreneurial firms with respect to the associations between technology sub-sector and marketing strategy type was tested through the application of ANOVA. The ANOVA results are summarized in Exhibit 4.9. As the data presented in Exhibit 4.9 indicate, the differences among well-established firms in relation to the association between marketing strategy type and technology sub-sector were statistically significant at p<0.05 (F = 5.665; df = 4, 322; significance = 0.000).

Exhibit 4.7: Cross Tabulation Analysis- Well-established Firms Marketing Strategy Types by Technology Sector Focus

Exhibit 4.9: ANOVA Results- Marketing Strategy by Technology Sub-Sector among Well-established Firms

Results Related to Research Question 4

Research question 4 asked: How do entrepreneurial firms differ from well-established firms on a sub-sector by sub-sector basis with respect to the type of overarching marketing strategy selected? Separate hypotheses were tested for each technology sub-sector. The general form of the hypotheses related to this research question is as stated below. The specific forms of the hypothesis are stated at the beginning of the presentation of the results for each technology sub-sector.

• Null hypothesis: There are no significant variations in the type of overarching marketing strategy selected between entrepreneurial firms and well-established firms within this technology subsector.
• Alternative hypothesis: There are significant variations in the type of overarching marketing strategy selected between entrepreneurial firms and well-established firms within this technology subsector.

Separate hypotheses were tested with respect to differences between entrepreneurial firms and well-established firms in relation to selected types of overarching marketing strategies for each of the technology sub-sectors. In each instance, the null hypothesis was that no significant differences existed between the two groups in relation to marketing strategy types. The significance of the differences in the distribution patterns was tested through the application of ANOVA to the relevant data. The results are presented in Exhibits 10 through 19.

Exhibit 4.11: ANOVA Results Marketing Strategy by Firm Group in the Electronics Sector

Exhibit 4.13: ANOVA Results- Marketing Strategy by Firm Group in the Computers Sub-Sector

Exhibit 4.15: ANOVA Results- Marketing Strategy by Firm Group in the Software Sub-Sector

Exhibit 4.17: ANOVA Results – Marketing Strategy by Firm Group in the IT Products Sub-Sector

The analyses related to research question 4 found that the tested differences within the technology sub-sectors were statistically significant, with one exception. The exception was the IT Products sub-sector. The findings for each of the technology sub-sectors were as follows:

• Electronics: Significant at p<0.05 (F = 5.332; df = 1, 166; Sig = 0.021)
• Computers: Significant at p<0.05 (F = 5.123; df = 1, 89; Sig = 0.047)
• Software: Significant at p<0.05 (F = 5.211; df = 1, 175; Sig = 0.026)
• IT Products: Not Significant at p<0.05 (F = 3.332; df = 1, 141; Sig = 0.060)

Results Related to Research Question 5

Research question 5 asked: What is the difference in the use of social media marketing between startups and well-established firms in the technology sector when controlled for sub-sector? One hypothesis to this effect was tested. The null and alternative forms of the hypothesis are as shown below:

• Null hypothesis: there is no significant difference in the use of social media marketing between entrepreneurial firms and well-established firms in the technology sector when controlled for the technology subsector.
• Alternative hypothesis: There is a significant difference in the use of social media marketing between entrepreneurial firms and well-established firms in the technology sector when controlled for the technology subsector.

It is found that there is a significant difference in the use of social media marketing between entrepreneurial and well-established firms. As already indicated earlier in this paper, it is not all companies that make use of social media marketing in the technological sector. This is despite the potential benefits of this form of marketing, especially to start-up firms. The findings of this study indicated that the well-established firms were making use of the social media marketing strategy more than the start-ups. The researcher took into consideration all forms of social media for the study. This means that Facebook, Twitter and other forms of social media were not distinguished.

Exhibit 4.19: chi-square Results- Use of Social Media Marketing by Company Group chi-square Tests

Discussion of Findings

In every case tested, entrepreneurial firms were less likely than were well-established firms to attempt to compete on price (a low-cost marketing strategy). In every case also, entrepreneurial firms were more likely than well-established firms to attempt to compete on differentiation in highly specific markets (a focused-niche differentiation marketing strategy). Consequently, one conclusion that was drawn was that entrepreneurial firms in the technology sector (for the most part) focus on the development of products (goods and/or services) that are designed to fulfill a specific functional need that either exists or that the entrepreneurs would like to develop. A second conclusion drawn was that this approach quite likely provides the best avenue to entrepreneurial success in the technology sector.

It was also found that well-established firms tended to use social media marketing more than their counterparts in the start-up category. However, the case was not the same for the IT sub-sector. Here, it was found that there was no significant difference between well-established and start-up firms as far as the use of social media marketing was concerned. However, a significant difference was observable in all other sub-sectors.

Study Summary and Conclusions Drawn

This study was an examination of the differences in the types of marketing strategies that are adopted and applied by entrepreneurial firms and well-established firms. The study purpose was two-faceted. First, the issue was to determine if, and if so how, entrepreneurial firms differ from well-established firms in the technology sector with respect to the type of overarching marketing strategy within which their products (goods and/or services) are promoted to their target markets. Second, the issue was to interpret the meaning of any variations that were identified to improve the understanding of how the stage of the life cycle of firms in the technology sector affects the choice of the type of overarching marketing strategy adopted by a firm. Five research questions were investigated in line with the study purpose. Hypotheses were tested in relation to each of the research questions. The research questions that were investigated were as follows:

1. How do entrepreneurial firms differ from well-established firms in the technology sector with respect to the type of overarching marketing strategy selected?
2. How do entrepreneurial firms differ from one another with respect to the type of overarching marketing strategy selected when controlled for the technology sub-sector?
3. How do well-established firms differ from one another with respect to the type of overarching marketing strategy selected when controlled for the technology sub-sector?
4. How do entrepreneurial firms differ from well-established firms with respect to the type of overarching marketing strategy selected on a sub-sector by sub-sector basis?
5. How do entrepreneurial firms differ from well-established firms in the technology sector with respect to the use of social media marketing when controlled for the technology sub-sector?

The research results found that the differences in marketing strategy types that are adopted and applied by entrepreneurial firms are different from those marketing strategies that are adopted and applied by well-established firms in each of the contexts where the statistical significance of such variations was assessed with the single exception of the IT Products sub-sector. Although the differences in this sub-sector were not statistically significant at the p<0.05 level of probability, the measured probability level applicable to this sub-sector was only p<0.06. It was also found that there is a significant difference between entrepreneurial firms and the well-established firms in the technology sector when it comes to the use of social media marketing.

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