A Longitudinal Analysis of Marketing Factors Related to Small Business Success

By Peterson, Robin T. | Journal of Business and Entrepreneurship, October 1992 | Go to article overview
Save to active project

A Longitudinal Analysis of Marketing Factors Related to Small Business Success

Peterson, Robin T., Journal of Business and Entrepreneurship


This manuscript reports on a study of marketing factors that were found frequently in a sample of profitable and unprofitable companies. The study involves a comparison of data from 1990 with other data from 1980. It indicates that profitable firms have tightly defined target markets; use specific consumer oriented goals; have clearly defined marketing policies, goals, and objectives; provide extensive services to customers; and make considerable use of word-of-mouth promotion.


It is a well-established fact that many small businesses fail each year. Almost 65 percent of business failures each year are attributed to firms with less than $100,000 in assets (U. S. Small Business Administration, 1989). This is the case for both new entrants to the marketplace and those which have been in existence for long time periods. Conversely, numerous others are able to achieve financial success quite consistently. The evidence indicates that the main cause of failure is inadequate sales; the second largest cause is competitive weaknesses, which is closely related to inadequate sales (Dunn and Bradstreet, 1989). Each of these shortcomings reflect defects in marketing decision making in small companies (McDaniel & Parasaraman, 1986).

This paper sets forth the output of a comprehensive inquiry which considered the more salient marketing characteristics of a sample of successful and unsuccessful small businesses in 1980 and compared these to marketing characteristics of another sample taken in 1990. It is instructive to small business managers to be aware of the nature of these characteristics and how they are changing, as inputs into decision making.


The objective of the inquiry was to identify marketing characteristics which differentiate successful firms from those which are not successful, and to denote the changes in them between 1980 and 1990. The author systematically examined a sample of written Small Business Institute cases selected randomly from the files of eight university Small Business Institutes by their respective SBI Directors and provided to the researcher. The sample was made up of 52% retail firms, 21% service establishments, 20% producers, 5% wholesalers, and 2% "other."

The results of this examination were compared to those of another sample of 71 cases collected in 1980 (Peterson & Lill, 1981). The distribution of firms by industry closely parallelled that for 1990. The examination procedure required subdividing the companies described in the S.B.I, reports into two categories based upon their sales and cost performance over the past three years: (1) profitable firms and (2) unprofitable firms. Profitable firms included those who earned a profit for at least two of the three years. Then a heuristic search took place, in which the author identified the more salient marketing characteristics; categorization was based upon the major components in a comprehensive marketing plan outline (Cohen, 1988). In this paper "salient marketing characteristics" refer to those which are the most effective in differentiating successful from unsuccessful companies. The data generation process followed the guidelines prescribed by Kassarjian (1977) for content analysis studies.

The results of the inquiry appear in Table 1. It sets forth the percentage of profitable and unprofitable companies which manifested a particular marketing characteristic. The last column contains the difference between the percentage of profitable and unprofitable companies for each characteristic. An examination of the two sets of "difference" scores set forth above is illuminating. The profitable companies for both years have a narrow (tightly defined) target market. Marketing theory supports this finding (Ring, Newton, Borden & Ferris, 1989). Unfortunately, numerous small businesses attempt to appeal to customers at large, rather than to specific segments.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

A Longitudinal Analysis of Marketing Factors Related to Small Business Success


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?