When you think of the essentials for growing a small business, you typically think of innovation and financing. But new research provides the first evidence that marketing deserves its own pocket in the entrepreneur’s tool bag.

When entrepreneurs in Kampala, Uganda, were paired with marketers for virtual coaching, they enjoyed dramatic growth, unlike those who received no coaching.

The study, led by Stephen J. Anderson, Texas McCombs assistant professor of marketing, speaks to the potential contribution of marketers, and it offers some evidence on the effectiveness of virtual business coaching: Entrepreneurs randomly matched with marketers saw their monthly sales increase by 52% on average, monthly profits by 36%, total assets by 31%, and the number of paid employees by 24% compared with a control group that didn’t get any outside business support.

But most importantly, the study provides insight into how a fundamental concept of marketing — product differentiation — works for small business in any economy.

Anderson recently answered questions for us about this research.

Why did you choose Uganda for this study?

Our partner Grow Movement was active in Uganda, and we also believed it was an entrepreneurial setting with high potential for impact. More critically, I wanted to empirically isolate the role of a marketer on company growth: think of a medical drug trial, but for business solutions. That’s hard to do in the U.S., partly because small businesses here have more resources and implement marketing practices alongside other business techniques.

That’s less the case in Uganda, so there is a better chance of running a clean field experiment with hundreds of entrepreneurs.

The marketers had an impressive impact. Do you think small businesses in other countries would experience similar results?

Perhaps the local conditions in Uganda’s emerging economy, or maybe a low starting threshold in terms of the entrepreneurs’ marketing capabilities, allowed the virtual coaching to drive large effects in company growth.

But leveraging a marketer’s viewpoint — to obtain novel product insights and distinguish them from other options in the marketplace — is fundamentally important, regardless of whether I’m in Austin or Africa.

So, the direction of these effects should generalize to any economy. If I’m starting a new business venture in the U.S., I’m going to face a lot of the same company growth challenges as someone in Uganda.

How does marketing address some of those challenges?

When we analyzed the text of the coaches’ call logs, we found the marketer coaches focused more on products and how to differentiate them from competitive offerings. Their advice related to researching other products in the marketplace, changing their offering in some way, and getting customer feedback. It was up to the entrepreneur to do the work.

One entrepreneur in the study had created his own sauce for rice, but his sales increased when he added a unique spice mixture that best met customer tastes. A salon owner distinguished herself by training in new, sought-after hairstyles. And a car mechanic was struggling because his business lacked focus — he was providing a broad mix of services, some profitable, some not. The coach urged him to narrow the focus to those services in highest demand and that he does better than others. Now he offers only quick tire rotations and oil changes. His business is thriving.

So, one key takeaway for entrepreneurs is to differentiate your product in the marketplace by understanding what customers want, then delivering that in a way that is unique from alternatives. Essentially, differentiating helps the entrepreneur answer the question: “Why should a customer buy from me and not someone else?”

You studied coaching via Skype, email and mobile calls, but the research was conducted before the pandemic made such collaboration the norm. Do you think virtual coaching works more generally?

We had 930 small businesses, with coaches from 60 countries. If you consider someone in the U.K. virtually coaching someone in Africa, it seems very challenging. But our results show this kind of virtual business coaching — even across very distanced and different markets — can be effective.

This is the first evidence that a virtual collaboration between professionals can effect changes in a business that directly impact firm performance. That’s good news for any business today.

http://www.mccombs.utexas.edu/
Contributor

Recently Published

Key Takeaway: Conspiracy theories are prevalent and can involve various factors. People believe false conspiracy theories for various reasons, such as the existence of real conspiracies. However, unfounded conspiracy theories often lack evidence and substitute elements that should be red flags for skeptics. To vet a claim, one should seek out evidence, test the allegation, […]
Key Takeaway: Recent research has focused on replicating the chemical reactions that constitute life as we know it in conditions plausible for early Earth around 4 billion years ago. However, the rise of experimental work has led to many contradictory theories. Some scientists believe that life emerged in deep-sea hydrothermal vents, where the conditions provided […]

Top Picks

Key Takeaway: NASA’s Curiosity and Perseverance rover missions are investigating the planet’s evidence for life, known as its “biosignatures,” in unprecedented detail. The rovers are acting as extraterrestrial detectives, hunting for clues that life may have existed eons ago, including evidence of long-gone liquid surface water, life-sustaining minerals, and organic molecules. The Mars of today […]
Key Takeaway: Jonathan Haidt’s book, The Anxious Generation, calls for action to limit teenagers’ smartphone access and address the mental health crisis caused by the widespread use of smartphones. Haidt cites the “great rewiring” period from 2010 to 2015 as a time when adolescents’ neural systems were primed for anxiety and depression by daily smartphone […]
Key Takeaway: Concerns about AI’s potential roguehood and potential harm to privacy and dignity are a significant concern. AI’s algorithms, programmed by humans, are also biased and discriminatory. However, a psychologist’s research suggests that AI is a threat to making people less disciplined and skilled in making thoughtful decisions. Making thoughtful decisions involves understanding the […]
Key Takeaway: A study published in the Journal of Personality suggests that long-term single people can be secure and thriving, possibly due to their attachment style. The research found that 78% of singles were insecure, with 22% being secure. Secure singles are comfortable with intimacy and closeness in relationships, while anxious singles worry about rejection […]

Trending

I highly recommend reading the McKinsey Global Institute’s new report, “Reskilling China: Transforming The World’s Largest Workforce Into Lifelong Learners”, which focuses on the country’s biggest employment challenge, re-training its workforce and the adoption of practices such as lifelong learning to address the growing digital transformation of its productive fabric. How to transform the country […]

Join our Newsletter

Get our monthly recap with the latest news, articles and resources.

Login

Welcome to Empirics

We are glad you have decided to join our mission of gathering the collective knowledge of Asia!
Join Empirics