An investigaton into the relevance of Guerrilla Marketing to small and medium-sized enterprises

Table of Contents

Abstract

Table of Contents

Table of figures

1. Introduction

2. Literature Review
2.1 Marketing Warfare Strategy
2.2 The Term ‘Guerrilla’
2.3 Guerrilla Marketing
2.3.1 Guerrilla Marketing Benefits
2.3.2 Guerrilla Marketing Principles
2.3.3 Non-traditional Guerrilla Advertising Methods
2.3.4 Word-of-mouth Communication
2.4 SME (Small and Medium-sized Enterprise)
2.5 Guerrilla Marketing Relevance to SMEs
2.5.1 Relevance of E-marketplace Guerrilla Marketing to SMEs
2.6 Examples of Guerrilla Campaigns
2.7 Conclusion of Literature Review

3. Methodology
3.1 The Research Process
3.2 Problem Definition
3.3 Research Design
3.3.1 Survey
3.3.2 Self-administered Questionnaire
3.3.3 Internet Questionnaire
3.3.4 Question Design
3.3.5 Critique
3.4 Sampling Unit
3.5 Data Collection
3.6 Data Analysis
3.7 Limitations of Methodology

4. Findings and Analysis

5. Implications of Findings and Analysis

6. Comparison between Theory and Practice

7. Conclusion

8. Further Areas of Research

9. References

10. Bibliography

11. Appendix

Table of figures

Figure 1: Guerrilla Marketing for FedEx

Figure 2: Guerrilla Marketing by Giovanni FCB Agency

Figure 3: Guerrilla Marketing by Saatchi & Saatchi

Figure 4: SME Threshold

Figure 5: Blair Witch Project

Figure 6: Gossard

Figure 7: McDonald’s

Figure 8 & 9: Horror Bookstore

Figure 10: VIP Gym

Figure 11 & 12: eBay

Figure 13: Match.com

Figure 14: World AIDS Day

Figure 15: Ola

Figure 16: Enterprise Category (Size of the SME)

Figure 17: SME Turnover 2005

Figure 18: SME Industry Operation

Figure 19: Guerrilla Marketing Experience

Figure 20: Guerrilla Marketing Importance of Generating Profit

Figure 21: Relevance of Guerrilla Marketing as a Cost-efficient Approach

Figure 22: Major Advantages of Guerrilla Marketing

Figure 23: Entrepreneur’s Age

1. Introduction

Guerrilla (ge’rilə) marketing; an unconventional way of promotional marketing activities on a low-budget level. This aggressive marketing approach is characterised by creative and legal attacks targeted on competitors in order to maintain or increase awareness and impact to the customer. Guerrilla marketing stands for focusing on conventional goals such as profit or growth, but doing it by using exceptional promotional approaches, like advertising in yellow pages, wild postings or non-traditional outdoor advertising media vehicles. Customers are confronted with an increasing amount of advertising messages per day and therefore organisations have to develop advertising approaches to stand out in today’s media fragmentation. Especially small and medium-sized enterprises are having greater internal limitations regarding a restricted budget for marketing communications and facing bigger external uncertainties than large organisation. Thus, marketing campaigns have to become profitable for an enterprise. The low-cost communication effort is one of the major issues for guerrilla marketers. It is particular relevant for a small company to apply a differentiated set of promotional methods to diversify itself from competition, but guerrilla marketing is also becoming more adopted by large enterprises.

Figure 1: Guerrilla Marketing for FedEx

illustration not visible in this excerpt

BBDO New York launched a guerrilla marketing campaign for FedEx in January 2006. This promotion was focused on advertising FedEx’s new online office product store.

This dissertation aims to give the reader a complementary insight of guerrilla marketing and investigates its relevance for a small and medium-sized enterprise (SME) in terms of generating profit. The purpose of this study is to identify how relevant this approach is to guerrilla entrepreneurs in small organisations, regarding profitability and flexibility in respect of strategy execution. The first section of this dissertation is concerned with the literal meaning and theory of guerrilla marketing, and its suitability for small and medium-scaled organisations. The second part focuses on the conduction of the survey which has been carried out in order to underline this research with qualitative and quantitative findings. Those findings are visualised and analysed in part three. The fourth part of this research study forms the implications of findings part, in which the results will be evaluated regarding the relevance of guerrilla marketing to small companies. The conclusion of this dissertation combined with a comparison between theory and practice highlight the last section of this research study.

In the following, literature review introduces guerrilla marketing as a metaphor of warfare.

2. Literature Review

This part is concerned with the literally meaning of marketing strategies, seen as a warfare weapon, to fight the marketing war against competitors. Furthermore, it gives an insight in four different marketing warfare strategy principles and highlights the specific term of guerrilla marketing strategy practice regarding entrepreneurial decisions, focused on small and medium-sized enterprises. The relevance for an SME to interact strategically online, by using guerrilla strategies combined with a selection of guerrilla campaign examples, concludes the literature review for this dissertation.

2.1 Marketing Warfare Strategy

A marketing strategy, according to Johnson and Scholes (2002), is a long-term direction and scope of an organisation, which achieves advantages through its resource formation in today’s vastly changing environment.

Businesses strategically consider their role in the growing market of competition and therefore are trying to create tactics to achieve substantial advantages, to battle their rivals successfully. Marketing warfare strategies are according to Ries and Trout (1986) strategies that try to draw parallels to marketing and warfare; focusing on analogies between military strategies and marketing strategies, in today’s business situations. The competitor is seen as the enemy and the market share refers to the battleground. In the 1980s business strategists like Ries and Trout (1986), as well as Philip Kotler (1980) adopted strategic military theories from books of Sun Tzu, The Art of War (translated 1910), or Carl von Clausewitz’s (1832) book, On War, in order to draw conclusions to the market situations.

An investigation of Ries and Trout (1986) concluded four main principles of marketing warfare strategies:

- The defensive marketing warfare strategy is focused on businesses which have already achieved a market leader position. The best way to improve or hold a position is by constantly attacking the market to protect the organisation’s market share, product positioning or profitability. To reciprocate the competitor’s attacks till the market position is assured, is the main objective in developing a defensive tactic. Defending the market position by scanning constantly the potential attackers and their alliances (market research) to highlight their weaknesses, is an essential principle. Furthermore, to attack the own organisational weaknesses can help to stabilise the market position and increase profit margins.
- The offensive marketing warfare strategy is used when businesses are focusing on the leader in the market. The strategy is created to obtain objectives like market share or key customer from the targeted competitor. Offensive tactics are concerned with attacking the weaknesses of the leader as effective as possible, e.g. lower prices or increase product quality. Launch the attack on as narrow a front as possible. The organisation, which is in the defending position, has to defend all of their barriers (markets); therefore, an attacking business can concentrate their power at a simple place (product or niche market). Furthermore, the time span of the strategic attack should be as surprising and as fast as possible to reduce the reaction time of the competitor.
- The flanking marketing warfare strategy implicates an attack focused on a market segment that the competitor does not consider to be critical, e.g. niche market sectors. A good flanking move must be made into an uncontested area. The most successful attacks are the surprising assaults because similar to the offensive attack, the competitor needs time to react. In addition, this could involve new product introduction, repositioning of existing goods or subtle promotional activities in market niches.
- The guerrilla marketing warfare strategy refers to the reservoir of tactical advantages, which small companies have in comparison to larger companies. Guerrilla marketing strategies are legal attacks targeted on the competitors, focusing on small market segments, e.g. distribution niches with flexibility and innovation in changing and eliminating tactics and approaches. Guerrilla marketers should penetrate a segment with unconventional marketing activities, such as short-term raids, product comparison or spreading the word-of-mouth. This strategic decision, mostly executed by small organisation with a limited resource arsenal, tries to gain customer awareness and to improve the business image.

These main principles are directions in which organisations can operate by executing their aggressive or defensive types of marketing tools. Marketing, seen as a metaphor of war, opens up new way of thinking about marketing and market research. It is not simply to sell products to the consumer; it is more about a battle of ideas to win customer’s hearts and minds (www.warc.com). In modern warfare a shift to unconventional and low-visibility operations can be identified. Similar to marketing, where a shift to below-the-line activities and viral communication are allocated. The next paragraph is focused on the strategies of guerrilla marketing and their literally definition.

2.2 The Term ‘Guerrilla’

According to the Encyclopaedia Britannica (2005) the term guerrilla, also spelled guerilla, etymologically comes from the Spanish word ‘ guerra ’, which means ‘ war ’. Guerrilla is the diminutive word for war (implicating ‘small war’) and was firstly used to describe the Spanish-Portuguese irregulars, who helped to drive the French from the Iberian Peninsula in the early 19th century.

The guerrilla warfare is characterised by irregular forces, fighting small-scale wars with limited actions; using unorthodox military strategies to fight against conventional military forces. The tactics used by guerrillas involve frequent shifts of attacks, a high mobility and flexibility. The guerrilla warfare is the weapon of the weak to fight against and to sneak from a superior enemy.

Guerrilla warfare is about using fast and flexible forces, combined with intelligence that is focused on infiltration, manipulation or conviction. Especially small organisations in the business world, compared as guerrilla units, draw parallels to modern marketing activities by using the intelligence of guerrilla warfare.

2.3 Guerrilla Marketing

The unprecedented fragmentation in the traditional media challenge organisations to implement the utilisation of unexpected, creative and in-your-face messaging guerrilla marketing tactics to gain high impact at a low-cost level (www.warc.com).

In the 1970s, in order to promote his new film ‘Frenzy’, Alfred Hitchcock floated a dummy of himself down London’s Thames River. This was an unusual promoting activity which can be seen as one of the first guerrilla marketing pushes into the markets, by creating buzz around the movie (www.economist.com). Guerrilla marketing matters more than before to small organisations but it is as well, more and more adopted in larger companies to create buzz.

The marketing theorists Al Ries & Jack Trout (1986) defined guerrilla marketing as a constructive marketing strategy of SMEs (Small and medium-sized enterprises) competing with large organisations.

They point out three major approaches for a successful guerrilla marketing:

- SMEs have to identify the market and find a market segment that is small enough to defend; a niche market is a good basic position for an organisation that narrows down their specific market segment by using their own resources to compete against a company with even more intensive resources. Segmentations can be conducted via product differentiation concerning target audiences or branch.
- SMEs should never assume the leadership, no matter how successful they become; a lean organisational structure of the guerrilla marketing implementing organisation is essential. This is an important factor for reducing costs and the company can react swiftly, and make decisions in term of rapid market changes or competitor’s counterattacks more quickly and efficiently. To assure a quick response on market chances, the percentage of personnel must kept marginally.
- SMEs have to be prepared to bug out at a moment’s notice; lean organisations have the opportunity to react flexible on market shifts or market segmentations. To eliminate unprofitable fields of activity can therefore be a benefit for small companies because they are able to channel their resources on more potential market segments, in which larger competitors need more time to enter.

Another definition and principles of guerrilla marketing according to Levinson (1984): “Achieving conventional goals, such as profits and joy, with unconventional methods, such as investing energy instead of money” (p.87).

Levinson points out three different approaches, firstly, that customers are increasingly attracted by small enterprises and furthermore that these businesses can use guerrilla marketing more effectively because of its size, organisational structure and niche market presence; guerrilla marketing is flexible, inexpensive and simple to implement into SMEs. Secondly, small enterprises shall concentrate on linking business relationships and cooperate with other valuable businesses, to increase recommendation and recognition. Thirdly, applying the internet as a device of marketing tool on a specific market segment instead of in-depth diversifying their services.

Ries and Trout (1986), as well as Levinson (1984) mentioned that guerrilla marketing activities mostly affect small and medium-scaled organisations because they are more likely to serve market niches than the big players in the market. A more in-depth analysis of an SME is given at point 2.4 of this dissertation.

Figure 2: Guerrilla Marketing by Giovanni FCB Agency

illustration not visible in this excerpt

The Brazilian advertising agency Giovanni FCB used guerrilla marketing to promote Disney’s new movie ‘Agua Negra’ (Dark Water) in 2005. This unconventional form of promotion was applied to places of high traffic, e.g. malls or cinemas.

2.3.1 Guerrilla Marketing Benefits

Guerrilla marketing, according to Levinson (1984) achieves benefits because of the small-scale nature regarding SMEs and furthermore, guerrilla marketing tools can be relatively quick and flexible implemented to react and respond to market changes. The velocity and surprise effects of guerrilla marketing can boost awareness and interest to the customer. The low-cost communication effort is one of the major issues for guerrilla marketers. Especially small enterprises, which do not have a vast marketing budget can benefit from this marketing strategy because the promoting activities are designed for a low-budget, e.g. online promotions or non-traditional advertising methods. Guerrilla marketing tactics concentrate on a particular market segment, which makes it more appropriate to design specific operations to reach the target market or target audience. Guerrilla approaches are mostly inexpensive and simple to implement and execute, with a focus on innovative actions to communicate with the audiences.

Guerrilla marketing takes influences on all issues of the marketing mix, but is mostly stressed on the marketing communication. An important axiom is to act freely in the market, which emphasises organisational flexibility and advantages in cooperation with businesses. The stamina of the guerrilla marketing applying organisations is an important fact to fight the ‘jungle war’ against competitors or their potential customers.

2.3.2 Guerrilla Marketing Principles

In a study by Levinson (1984, 1995), Levine (2002), Ries and Trout (1986) main guerrilla marketing principles were investigated as tactics, which deliver results caused by creativity and unconventionality.

The authors focused mainly on the following approaches:

- Guerrilla marketing should be a ‘360° marketing’ in terms of time, creativity and energy. The applied marketing activities shall be innovative by using new technology to create a multiplier effect, e.g. post the messages on places where people are frequently confronted with.
- Guerrillas try to implement myths to amplify recognition and target the audience with precision, instead of providing the majority with equal information.
- Guerrilla marketing focuses on psychological cognitions about consumer behaviour instead of concentrating on presumptions of customer needs, e.g. precise analysis of the targeted audience and niche market.
- Competition and market share are rather secondary objectives. Main focus should be on cooperation with the customer and other businesses in order to satisfy the consumer needs. In addition, long-term business relations and customer loyalty instead of short-term contract conclusions, should be the basis for a substantiate guerrilla B2C organisation.
- Guerrilla marketers are forced to find ways to promote their business and their product or service opportunities at all times, e.g. chat rooms, blogs, discussion boards or e-mails.
- Guerrilla campaigns should be unconventional and generate buzz, but it has to consider legality and should not avoid public or ethical offences.

The above mentioned authors shared the notion that guerrilla marketing can affect mostly the small and medium-scaled organisation’s marketing processes, because of their necessity to establish activities into the market, to develop product awareness and recognition.

2.3.3 Non-traditional Guerrilla Advertising Methods

Non-traditional or unconventional advertising methods according to Levinson (1995) are promotional tools, which can widely influence small business recognition or public interest. Guerrilla advertising tools consist of a range of low-cost activities, such as:

- Implementing pop-up ads or exchanging banner-advertisements with linked websites;
- Posting messages on a variety of newsgroups which fit to the target audience;
- Messaging in blogs, i.e. a website for which an individual or a group generates text or data;
- Offering gratuitous consultations or presentations about the product or service;
- Placing stickers in target area or spray degradable graffiti on the pavement;
- Generating a myth or curiosity;

Guerrilla marketers are trying to ambush the market by utilising creative approaches to generate interest.

Figure 3: Guerrilla Marketing by Saatchi & Saatchi

illustration not visible in this excerpt

Saatchi & Saatchi (New York) placed cardboards around selected areas in order to highlight public restroom shortage in New York. Selected areas were identified to get people’s awareness to that problem in 2005.

Guerrilla businesses are focused on crowded places where they can spread the messages or appear surprisingly. Another low-cost advertising method with a vast effect can be the word-of-mouth communication.

2.3.4 Word-of-mouth Communication

In a study by Pickton and Broderick (2001) the literally meaning of word-of-mouth communications “are the conversations held between the receivers, whether or not all members received the original marketing communication” (p.738).

The guerrilla marketing strategy focuses on opinion leaders or gatekeeper which may have a strong influence on the target group. Recommendations of people we are familiar with escalate credibility. In addition, people talk and forward interesting messages much faster than via traditional media vehicles. According to Levinson (1995) businesses should penetrate crowded places to spread the word-of-mouth by getting the company’s message across. An insider or an insider group, which acts like customers, can be used to accelerate the effect of interest or buzz, by using a guerrilla tactic, e.g. exhibitions, demonstrations or presentations. Furthermore, high-traffic spots like clubs, pubs or sport events can be used optimally to target a young audience.

The guerrilla marketing benefits and principles, according to the above mentioned authors are mostly focused on the adoption of SMEs, although large enterprises also use approaches of guerrilla marketing to penetrate the market and create awareness through differentiated advertising. The next paragraph is concerned with the term SME (small and medium-sized enterprise), followed by an analysis of the relevance to apply guerrilla marketing strategies.

2.4 SME (Small and Medium-sized Enterprise)

Storey (1994) argues that there is no uniform definition of a small firm because the heterogeneity of the market complicates an evaluation. However, the Bolton Committee (1971) formulated three major criteria which should be satisfied by small firm:

- Small businesses have a relative low market share;
- Small organisations are managed by owners or part-owners and not through a formulised management structure;
- Small enterprises are independent and not building a part of a large firm;
An alternative distinction is given by Wynarczyk et al. (1993). He pointed out that the difference between small and large firms are basically:
- Small businesses have greater external uncertainties concerning the environment and greater internal consistencies of its motivations and actions;
- Small firm have a bigger role in innovation and introduction of totally new products because of occupying niches;
- The third distinction between large and small firms is the structural organisation change which can be preformed more rapidly;

The European Commission (EC) identified problems by defining the term SME and disaggregated SMEs in three components (2005):

- Micro-enterprises: 0 – 9 employees;
- Small-enterprises: 10 – 49 employees;
- Medium-enterprises: 50 – 249 employees;

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