Factors That Contributed to the Lack of Market...

Vol. 2, Mac 2017 Asian Journal of Technical Vocational Education And Training (AJTVET) 1

Factors That Contributed to the Lack of Market Acceptance

on Small Medium Enterprises Product: A Case Study on Food

and Beverage SMEs, Selangor

Nor Suhaila Tahir*, Nor Salmawati Abdul Karim

** and Norhashimah Mohd Nordin

***

*Commerce Department,

Politeknik Port Dickson, 71050 Port Dickson, Negeri Sembilan, Malaysia.

Email: [email protected]

**Commerce Department,

Politeknik Port Dickson, 71050 Port Dickson, Negeri Sembilan, Malaysia.


***Commerce Department,

Politeknik Sultan Salahuddin Abdul Aziz Shah, Persiaran Usahawan, Seksyen U1,

40150 Shah Alam, Selangor, Malaysia.


Abstract

This study aims to examine the acceptance of product manufactured by Small Medium Enterprises (SMEs).

The study was conducted at Pasar Tani, section 13 Shah Alam, Selangor. A total 230 samples were selected

as the research subjects. Interview was conducted with the manager of NE Company. The main purpose of

this study was to identify the problem which faced by the SMEs in marketing their products. The findings of

this study showed that half of the consumers know about the products produced by the NE company. By

using marketing mix, the study found that promotion by NE was the most significant element that attracted

the consumers to buy their products. Thus, the company should play an important role in their marketing mix

especially on promotion to increase their product sales.

Key words: SMEs, Marketing Mix, Food and Beverage

1. Introduction

Small Medium Enterprises (SMEs) are defined based on the characteristics of the paid up capital and workforces.

For small industries, share capital is less than RM500,000 and has a permanent labour between 5 and 50. While a

medium enterprise has paid-up capital to RM2.5 million and has labour between 51 to 75. SMEs also can be identified

by the division of workers in their operations. Most of the division of SMEs are not clearly justified. It is common in

the SMEs sector; a worker may perform many tasks or duties such as production operator, technicians, clerks, sales

staff, officers and others at the same time.

In Malaysia, SMEs is based on the definition of National SMEs Development Corporation (2005) as follow:

Table 1: SME Definitions in Terms of Annual Sales Turnover

Size Primary Agriculture Manufacturing (including

Agro-Based) and

Manufacturing Related

Services

Services Sector (including

Information

Communications

Technology (ICT) )

Small Between RM200,000 and

less than RM 1 million

Between RM250,000 and

less than RM10 million

Between RM200,000 and

less than RM 1 million

Medium Between RM 1 million and

RM 5 million

Between RM 10 million

and RM 25 million

Between RM 1 million and

RM 5 million

SME Not exceeding RM 5

million

Not exceeding RM 25

million

Not exceeding RM 5

million

mailto:[email protected]:[email protected]:[email protected]


Table 2: SME Definitions in Terms of Full Time Employees

Size Primary Agriculture Manufacturing (including

Agro-Based) and

Manufacturing Related

Services

Services Sector (including

Information

Communications

Technology (ICT) )

Small Between 5 and 19

employees

Between 5 and 50

employees Between 5 and 19

employees Medium Between 20 and 50



employees SME Not exceeding 50

employees Not exceeding 150

employees Not exceeding 50

employees

According to Abdullah (1999a), problems faced by SMEs do not differ much from one country to another.

Meanwhile, some of the major problems faced by SMEs are inherited, like the small size. The problems prevent their

full potential to expand. Some SMEs still use the traditional way, which has been practiced by the whole family using

the traditional or old technology to produce the cheap and low quality products for their markets. Many of SMEs face

problems especially in modernizing their production system to fulfil the market needs in global economy. The problem

faced by SMEs is very similar to each other within the industry; such as lack of access to credit, old technology, poor

management, unskilled labour, raw materials, and unsuitable sites for operations of SMEs.

However, the importance of SMEs to Malaysian economies has been widely recognized. Moreover, SMEs have the

resources and could develop more capabilities and take advantages on them. The current study is hoped to contribute to

enhance their potential to the fullest and push their growth to global.

2. Problem Statement

It is undeniable; business is a very challenging field. Various factors are needed for success in business including

management skills, competent staff, strong financial resources, products and services, and most importantly the

customers. Marketing is the most important part in order to attract customers because without customers, the business

will not survive in the market. The focus of the study is on the marketing strategy used by the NE company. The study

was conducted to examine the level of acceptance of the NE products in the market. In this study, the researchers will

study the factors of consumer acceptance based on product, place, promotion and price (4P‟s) at Pasar Tani Seksyen 13,

Shah Alam, Selangor.

3. Research Objective

In general, this study seeks to identify problems and SMEs marketing mix used to increase their product acceptance

in Shah Alam, Selangor. Specifically, this study will focus on the following objectives:

i. To examine the market acceptance based on promotion, places, price and products (4P‟s). ii. To determine which factors that attracts the consumer to buy the products

4. Literature Review

The success of an SME to some extent is influenced by the elements of effective marketing. Marketing and

promotion are the basis of any growth of a business. Marketing activities will be able to speed up the exchange process

of products or services to money or other benefits. It also can strengthen and prolong the life of the business through

modification of products to meet customers' needs. Promotion involves the dissemination of information on the

products, product lines, brands or companies. Promotion is one of the four most important aspects of the mixed

marketing besides product management, pricing and distribution (Che Omar & Tajudin, 2014). In addition, Abdullah

(1999a) said that marketing strategy plays an important role in determining the success or failure of businesses.

Marketing involves a number of activities. To begin with, an organisation may decide on its target group of

customers to be served. Once the target group is decided, the product is to be placed in the market by providing the

appropriate product, price, distribution and promotional efforts. These are to be combined or mixed in an appropriate

proportion so as to achieve the marketing goal. Such mix of product, price, distribution and promotional efforts is

known as marketing mix. According to Kotler and Keller (2007), marketing mix is the set of controllable variables that

the firm can use to influence the buyer‟s response. Each firm strives to build up such a composition of 4„P‟s, which can

create the highest level of consumer satisfaction and at the same time meet its organisational objectives.

Singh (2012) states product refers to a physical product or service which a consumer is ready to pay. It includes

tangible goods like furniture; garments, grocery items etc and intangible products like services are purchased by

consumers. The product is the key element of any marketing mix.


Price is the amount the consumer must exchange to receive the offering (Borden & Marshall, 1959). It is the second

most important element in the marketing mix. According to Singh (2012), as the price of a product depends on different

elements and hence it changes constantly; thus, the pricing should be dynamic so that it can bear the changes over time

duration. The important factor in pricing decides the cost of the product, strategy for marketing & its expenses related to

distribution, advertisement expenses or any kind of price variation in the market. Nonetheless if there is a change in all

the variables then generally the pricing of the product may vary accordingly (Singh, 2012).

Lusk (2003) said that place refers to the distribution channels used to get the product to the customers. The types of

the product will greatly influence how to distribute it. For example, own a small retail store or offer a service to a local

community, then at the end of the distribution chain, it supplies directly to the customer. Businesses that create or

assemble a product will have two options either selling directly to consumers or selling to a vendor.

In addition, Lusk (2003) states promotion refers to the advertising and selling. It is how to let people know what it

has for sale. The purpose of promotion is to get people to understand what the product is, how they can use, and why

they should want it. The customers, who are looking for a product, know that the product satisfies their needs. To be

effective, the promotional efforts should contain a clear message targeted to a specific audience reached via an

appropriate channel. The target audience will be the people who use or influence the purchase of the product. Business

should focus on the market research to identify their target customers. Promotion may involve advertising, public

relations, personal selling, and sales promotions.

All the four variables of marketing mix are interconnected (Singh, 2012). Fulton et. (2000) states the 4P‟s (product,

price, place, and promotion) should work together in the marketing mix. Often, decisions on one element will influence

the choices available in others. Selecting an effective mix for the market will take time and effort, but these will pay off

as it satisfies customers and create a profitable business. Once business have a good marketing mix, the right product at

the right price, being offered in the right place and promoted in the right way, it will continue to stay at the top of

market changes and survive in the market.

A study on the method of improving SME marketing has also been done by Mohd Nor and Abdullah (1998). Most

of the food products are for domestic market (90%) and only 10% of the surveyed firms export their products abroad.

Most studies done only see problems in all industries in general and touch on methods to increase marketing in general

but there is no detailed study on the carried out marketing method (Che Omar & Tajudin, 2014).

Lastly, there are many factors that affect the acceptance of SMEs products in the market. One of the factors that the

business should take seriously is their marketing mix, to attract more customers to buy their products. With that, it is

hoped that this study will contribute to the increased understanding of the methods to improve the marketing mix by

SMEs.

5. Research Methodology

The data was collected through surveys and interview conducted. The questionnaire was distributed to the

consumers at Pasar Tani Seksyen 13, Shah Alam Selangor. The questionnaire is divided into four sub-topics; Part A

(demographic of consumers), Part B (consumer acceptance on SME products), Part C (SMEs price), Part D (SMEs

product sale) and Part E (SMEs product promotion). The sample size for this study is 230 consumers (Krejcie &

Morgan, 1970). The data was gained from the Majlis Bandaraya Shah Alam (MBSA). Questionnaire was distributed by

the researcher to randomly selected SMEs consumers. Besides that, an interview also was conducted with the manager

of NE Company. A descriptive analysis method was used in this study.

6. Results

6.1 Descriptive Analysis

The following are the results of the findings based on the analysis conducted on the questionnaire.

6.1.1 Respondent Demographic Profile

Table 3: Respondent Demographic Profile

Profile Categories Frequency Percentage

Gender Male 111 48.3

Female 119 51.7

Age 18 - 25 95 41.3

26 - 35 77 33.5

36 - 45 33 14.3

> 56 21 9.1


Ethnic Group Malay 106 46.1

Chinese 54 23.5

Indian 49 21.3

Other 21 9.1

Monthly Income < RM 1000 60 26.1

RM1001- RM2000 61 26.5

RM2001- RM3000 74 32.2

RM3001- RM4000 32 13.9

> RM4000 2 0.9

From table 3, majority of the respondents were females which were about 51.7% and 41.3% was within the

common age ranged from 18 to 25 years old. From the study, the researcher found that 32.2% from the respondents

have monthly income between RM2001 to RM3000.

6.1.2 Consumer Acceptance on SMEs Products

Table 4: Consumer Acceptance on SMEs Products

Statements Categories Frequency Percentage

The packaging of NE products is

attractive to you

Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

10

25

46

116

33

4.3

10.9

20.0

50.4

14.3

NE products that you are using do not

have any side effects

Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

5

33

46

103

43

2.2

14.3

20.0

44.8

18.7

Do you believe in NE products in the

market?

Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

4

16

82

88

39

1.7

7.0

35.7

38.3

17.0

NE products in the market meet your

needs and requirements

Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

3

16

64

107

40

1.3

7.0

27.8

46.5

17.4

I will suggest my friends to try NE

products

Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

2

20

65

96

47

0.9

8.7

28.3

41.7

20.4

Based on table 4, the researcher found that most of the respondents, 50.4% agreed that the packaging of NE

products was attractive to them. Besides, 44.8% also agrees that the NE product does not have any side effects on them.


6.1.3 Consumer Acceptance on the SMEs product price

Table 5: Consumer Acceptance on the SMEs product price


The price of NE products is reasonable

in market

Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

3

14

60

112

41

1.3

6.1

26.1

48.7

17.8

I still buy the NE products if the price

has increased

Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

11

21

79

82

37

4.8

9.1

34.3

35.7

16.1

The price of NE products is similar to

the other products

Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

14

18

49

102

47

6.1

7.8

21.3

44.3

20.4

From table 5, 48.7% of the respondents agreed that the price of NE product was reasonable in market. If the price

of NE product increases, 35.7% agreed to continue buying the product.

6.1.4 Consumer Acceptance on the SMEs Product Sale

Table 6: Consumer Acceptance on the SMEs Product Sale


NE products are easily to find Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

12

31

61

88

38

5.2

13.5

26.5

38.3

16.5

I am willing to go the other places if NE

products are not in the current area

Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

11

6

70

114

28

4.8

2.6

30.4

49.6

12.2

I often buy NE products at the same

place

Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

1

24

37

135

33

0.4

10.4

16.1

58.7

14.3

According to table 6, most of the respondents, which was 38.3%, agreed that NE products were easy to find.

Besides that, 49.6% respondents agreed with the statement that “ I am willing to go to the other places if NE product is

not in the current area”.


6.1.5 Consumer Acceptance on the SMEs Product Promotion

Table 7: Consumer Acceptance on the SMEs Product Promotion


Should NE products be expanded

further?

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

16

42

126

46

7.0

18.3

54.8

20.0

I often visit promotion by NE products Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

10

8

67

99

46

4.3

3.5

29.1

43.0

20.0

I am interested in buying NE products Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

38

68

92

32

16.5

29.6

40.0

13.9

Did the promotion carry out by NE was

sufficient?

Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

8

44

42

90

46

3.5

19.1

18.3

39.1

20.0

I will follow all the NE promotion

progress

Strongly Disagree

Disagree

Neither Agree or

Disagree

Agree

Strongly Agree

35

15

49

93

38

15.2

6.5

21.3

40.4

16.5

Based on the analysis, 54.8% agreed that promotion of NE product should be expanded further. 39.1% agreed that

the promotion carried out by NE was sufficient.

6.2 Findings from the Interview

The interview was conducted with Manager of the NE Company, to get further explanation of the problem faced

and other information of NE Company.

Based on the interview, the total sales of NE Company from 2007 until 2011, was increased in 2007, it recorded

RM 1.2 million total sales, RM 1.3 million in 2008, RM 1 million in 2009, RM 1.5 million in 2010 and in the middle of

year 2011, it was recorded RM 2.0 million total sales. The sales reduction occurred in 2009 because of the economic

crisis in that year.

From the interview, we discovered that NE products have an advantage on the promotional method against other

SMEs company. The manager said that NE products have been a lot in television programs as sponsors for „Ketuk-

Ketuk Ramadan‟ and get a lot of government sponsors like MARA, MARDI and FAMA. But NE products also have

weakness, for example lack of employees and the company does not do promotion more frequently.

The manager also said that the company has not reached their desired goal. This is because they want to open

branches in China, but due to financial problems they could not fulfil that.


7. Discussion

The main objective of this study is to identify the problems faced by NE company. From the findings, majority of

the respondents were females, which was about 51.7% and 41.3% were in the age range of 18 to 25 years old. From the

study, researcher found that 32.2% from the respondents have monthly income between RM2001 to RM3000.

Furthermore, the researcher found that most of the respondents, 50.4% agreed that the packaging of NE products is

attractive to them. Besides that, 44.8% also agreed the NE product does not have any side effects on them. 48.7% of

them also agreed that the price of NE product is reasonable in market. If the price of NE product increases, 35.7%

agreed to continue buying the product. Based on the analysis, 54.8% agreed that promotion of NE product should be

expanding further. From the findings, promotion carried out by NE is sufficient and 39.1% agreed on it.

Lastly, based on our research, there are many factors that affect the acceptance in SME products. One of the factors

is that the NE should focus on marketing strategies to attract more consumers to buy their SME‟s products. By using

marketing mix, the researcher found that promotion by NE was the most significant element that attracts the consumers

to buy their products. Thus, the company should play an important role in their marketing mix especially on promotion

to increase their sales.

8. Conclusion

It is a very complex and difficult task for NE to understand the buying behaviours of their consumers. They need to

develop products and marketing programs that will satisfy their customers' needs and wants in a better way. Different

marketing mix has been utilised by the NE in marketing their products. As a conclusion, the study has fulfilled its

objectives to examine the market acceptance of NE products based on promotion, places, price and products (4P‟s) and

determine which factors that attract the consumers to buy their products.

9. References

Abdullah, M. A. (1999a). Pembangunan Industri Kecil Dan Sederhana. Kuala Lumpur: Fajar Bakti Sdn. Bhd.

Abu Bakar, L. J. & Ahmad, H. (2010). Small Medium Enterprises’ Resources and the Development of Innovation in

Malaysia. Journal of Innovation Management in Small and Medium Enterprises, Vol. 2010.

Ahmad, A. (2009). Marketing Practices among Malaysian SME’S in Agro-Based Industry. Prosiding Persidangan

Kebangsaan Ekonomi Malaysia (PERKEM IV), Jilid 2, 145-150.

BNM (2005). Definitions for small and medium enterprise in Malaysia (Approved for adoption by National SME

Development Council on June 2005). Bank Negara Malaysia, pp 1-7.

Borden, N. H & M .V. Marshall. (1959). Advertising Management: Text and Cases. Homeword, III, Richard D. Irwin.

Che Omar, C. M. Z. & Tajudin, A. (2014). The Marketing of Small and Medium Enterprise (SME) Products Based on

Food Processing. European Journal of Business and Social Sciences, Vol. 3, No. 5, pp 76-87.

Fulton, J. R., Hine, S. & Black, D. (2000). Challenges for Agricultural Cooperatives when Serving Different Market

Segment that result from Urbanization. Journal of Cooperatives, 15, pp 14-30.

Kotler, P. & Keller, K. (2007). Marketing Management. Singapore: Pearson Prentice Hall.

Krejcie, R. V. & Morgan, D. W. (1970). Determining Sample Size for Research Activities. Educational and

Psychological Measurement. 30: 607-610.

Lusk, J. L. (2003). Using Experimental Auctions for Marketing Applications: A Discussion. Journal of Agricultural and

Applied Economics, 35, 2, pp 349-360

Mohd Nor, N. M & Abdullah, M. A. (1998). Usahawan dan Industri Kecil Makanan di Pulau Pinang. Kuala Lumpur:

Jabatan Antropologi dan Sosiologi Universiti Malaya.

Singh, A. (2012). Marketing Mix of 4P’S for Competitive Advantage. IOSR Journal of Business and Management, Vol.

3, No. 6, pp 40-45.

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