Published in The Small Business and Enterprise Development Journal, 2(3), 142-148, 1995.

THE MARKETING OF LOCAL ENTERPRISE AGENCIES

Michael Kirk-Smith

School of Management, University of Ulster, Newtonabbey, BT37 0QB, Northern Ireland. Tel:
0232.365131x2629, Fax: 0232.362847, Email mks@ulst.ac.uk

and

William Gault

Roe Valley Enterprises, Market Street, Limavady, BT49 0AA, Northern Ireland. Tel:
05047.62323, Fax: 05047.63637

Abstract

Business start-ups and enterprise development are supported by the UK Government with the
provision of managed workspaces and ancillary facilities through Local Enterprise Agencies
(LEAs).

LEA managers may not have business or marketing backgrounds. This study investigated the use
of marketing concepts and practices by LEAs. A questionnaire was sent to a sample of 30 LEA
managers (i.e., 10% of all LEAs), covering LEA managers understanding of LEAs' market
"positioning", promotional activity, and client targeting.

The findings showed that application of formal marketing was weak, even amongst LEA
managers with marketing qualifications, with little indication that entrepreneurs are seen as a
target market. Planning, in which entrepreneurs are notably weak, was seen overall as the most
important criterion for client selection. LEAs may therefore be de-selecting entrepreneurs in
their selection procedures.

These findings suggest a weakness in LEA operations. It is recommended that training should be
given to LEA managers in marketing specifically tailored to the LEAs' task.

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THE MARKETING OF LOCAL ENTERPRISE AGENCIES

INTRODUCTION

Government has recognised the importance of enterprise development to the economy, given the
relative decline of large scale industrial employers and the rise in the numbers of small
businesses and self employment (Training and Employment Agency 1991). It is widely
accepted, however, that small firms have a high failure rate, with figures perhaps as high as 60%
failing within six years (Story & Johnson 1987). One of the ways that the UK government has
developed to combat this situation has been the provision of managed workspace for business
start-ups through Local Enterprise Agencies (LEAs). The workspaces are coupled with ancillary
services such as reception and secretarial support, office equipment, advice and training and, on
occasion, loans. There are now some 300 such organisations in the UK (Lawless & Ramsden
1992). The criteria for the selection of their clients involves such considerations as good
planning, sound finance and low pollution, likely job creation and competition with existing
clients (Business in the Community 1988, Lawless & Ramsden 1992).

Ideally, too, workspace clients should possess entrepreneurial characteristics, since entrepreneurs
are recognised as most likely to achieve success in business start-up and growth stages of
organisation development (Drucker 1977, Rosenberg 1986, Silver 1985, Story 1982, Carson &
Cromie 1990). Burrows (1987) provides a useful general definition of an entrepreneur as
someone who "recognises an opportunity, raises the money and other resources needed to exploit
that opportunity, and bears some or all of the risk associated with executing the ensuing plans".
This definition emphasises the entrepreneur's motivational characteristics rather than his/her
business skills. The attracting of entrepreneurs into LEA workspaces will involve marketing
activities. Research into the application of these marketing concepts strongly suggests their value
in successful business development (Peters & Waterman 1982, Cavanagh & Clifford 1986,
Folsom 1991, Kotler 1994). Rapid environmental change, such as that experienced by today's
business, makes effective marketing all the more critical (Brookshank 1991).

The application of formal marketing practice by LEA management would require the

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identification of its target market 'segment' as those with entrepreneurial potential and the
development of relevant services, delivery and promotion strategies to attract the 'target' segment
to its services. This would include, for example, the development and publicising of a particular
LEA's specific "position" in the marketplace (for example, one source of competitive advantage
for LEAs over other workplace providers are their ancillary supports). Distinctive competencies
must be presented as being relevant to the needs of the target market. The marketing activity of
the LEAs will be inefficient if it does not explicitly target and attract potential entrepreneurs and
develop and provide the services they require.

Guide-lines do exist for 'good practice' in the management of LEAs (Jackson, Mair & Nabarro
1987). Guides are also provided to LEAs by the Training and Employment Councils (TECs)
which operate in each region of the country. These guides, however, show little evidence of a
marketing perspective. For example, there is no mention of marketing audits, market research or
market segmentation and targeting. Therefore, in the absence of professional guidance from the
industry, the level of professional marketing that individual LEAs apply to their business will
depend, to a large extent, on the orientation of individual managers working therein. Required
managers' qualifications and other personal characteristics are determined by individual
authorities and it is not known what level of formal marketing qualifications exists within LEA
management.

AIMS OF THIS PAPER

Given these concerns, the issues examined in this paper are therefore:

A The level of professional marketing expertise within LEA management.

B The extent to which formal marketing practice is being used by LEA management.

Specifically, the research which underpins this paper investigated the following questions:-

1. Do LEA managers understand their 'position' in the marketplace, i.e., what target groups do

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the LEAs believe themselves to be serving?

2. Do LEA managers understand their target market segment to be entrepreneurs, i.e., what
selection procedures do LEAs employ and are entrepreneurs effectively selected?

3. Do LEA managers effectively use their promotion activities to attract entrepreneurial clients,
i.e., do the promotion efforts of LEAs "target" entrepreneurs?

4. Do marketing qualifications help? A comparison will be drawn between the use of formal
marketing practice between those managers who possess formal marketing qualifications and
those who do not.

RESEARCH METHOD

A random sample of 30 LEAs, representing 10% of the total population, was drawn from a
directory of the 300 LEAs in the UK (Jackson Mair & Nabarro 1987). The manager of each LEA
in the sample was asked to complete a questionnaire.

The questionnaire was in six parts. Part A identified the LEA, part B asked for the formal
qualifications of the LEA manager. This information was used to determine the level of
marketing expertise within the LEA management and to compare the performance of those who
have formal marketing expertise with those who do not.

Part C asked the respondent to "Please list the four segments of the community that will, or do,
benefit most from your service. These segments need not be mutually exclusive". As well as
seeking to identify their perceptions of their target markets, the purpose of this question was to
determine the level of understanding that the LEAs have of their 'position' in the marketplace.

In part D respondents were asked "Please rate the following qualities in order of importance - as
looked for in order of importance" on a comparative-ratings scale, where 1 = most important and
6 = least. The six qualities or attributes were Marketing Planning, Drive & Enthusiasm,

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Business Planning, Financial Planning, Financial Security and Management Experience. Chell et
al. (1991) found that the behaviours that typified the entrepreneur were being opportunistic,
adventurous, creative, restless, proactive, innovative, and as having with a growth orientation.
While it is understood that the attributes of Planning & Experience are important for success,
these behaviours suggest that Drive & Enthusiasm are more typical traits of entrepreneurs.

Part E determined the level of success of each LEA on the criterion of client organisation growth
by asking for the percentage of their clients moving onto larger accommodation.

Part F asked the respondents if they used a) newspaper advertising, and to whom it was targeted,
b) leaflets/flyers, and where they were distributed and c) Public Relations methods, and to
describe them.

An initial questionnaire was sent to 10 LEAs. Their suggestions were then incorporated in a
revised questionnaire. The sample of 30 were first telephoned and informed of the purpose of
the study. Questionnaires were then posted with reply envelopes.

RESULTS

The response was 83% (25/30). The following are a summary of the main results.

LEAs that responded to Part A of the survey ranged in size from 6,370 sq. ft. to 56,000 sq. ft.
with a mean of 24,000 sq. ft.. These data indicate that the 300 LEAs may now represent a
significant section of small and medium sized business tenancies. Almost all of the agencies
opened in the early eighties, with only two opening in the very late seventies.

Responses to Part B showed that while some managers were very highly qualified. (i.e., 30%
were qualified to degree level) others possessed very few formal qualifications at all (Table 1).
Other responses mentioned, but not shown on Table 1, include the Arts, Agriculture and Mariner.
Slightly over half of the LEA managers held formal marketing qualifications (13/25).

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When identifying the segments of the community seen as benefiting most from their service (Part
C), only three respondents (12%) mentioned entrepreneurs (Table 2); two of whom were
qualified in marketing.
(Tables 1 and 2 about here)

Overall responses by both the marketing qualified and non-marketing qualified groups to Part D
rated Planning as the most important client attribute (Table 3). Drive & Enthusiasm was second
overall. However, marketing qualified respondents rated Drive & Enthusiasm significantly more
important than non-marketing respondents (with means of 2.1 and 3.3, respectively; p= 0.043,
Mann-Whitney U test).

Part E results showed a tendency for LEAs with marketing qualified managers to move a higher
percentage of clients on to larger business accommodation (65.0% compared to 41.7%, see Table
4) although this difference was not statistically significant (p<0.06, T-test).

(Tables 3 and 4 about here)

In Part F no respondents referred to entrepreneurs as a target group (Tables 5, 6, & 7). The list
of target groupings, although extensive and also including solicitors, accountants and other
professionals who may have been in touch with prospective entrepreneurs, was narrowly
clustered within Job Clubs (6/25) and small business (10/25). Newspaper advertising was the
most popular method of promotion and was used widely by both marketing and non-marketing
centres. However, LEAs with marketing qualified managers made more comprehensive use of
promotion, e.g., incorporating significantly more Public Relations methods, such as open days,
school days and seminars (p=0.04, Chi²) and flyer distribution (p=0.02, Chi²) in their campaigns
(Table 8).

(Tables 5, 6 and 7 about here)

DISCUSSION

The aims of the research reported in this paper were to discover the nature and extent of the use

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of formal marketing by LEA management. The results will now be discussed in terms of these
aims.

The LEA managers participating in this study appear to demonstrate a poor understanding of
their market position since in listing the segments of the community which the LEA managers
saw themselves as serving, few considered that entrepreneurs were their main target. It is
possible that respondents may not have conceptualised entrepreneurs as a "segment of the
community", although the "segment" was specifically chosen as a marketing terminology likely
to elicit their perceived target market segment (i.e., the entrepreneur). An alternative phrasing,
e.g., "target group" might have elicited different responses.

"Drive and enthusiasm" were chosen to reflect the typical behaviours of the entrepreneur, i.e.,
opportunistic, adventurous, creative, restless, proactive, innovative, and growth orientation
(Chell et al. 1991), so these behaviours should be major criteria for client selection.
Entrepreneurs are also known to be weak at formal planning (Stanworth & Gray 1982, Burrows
1978). However, these results indicate that, overall, LEA managers see planning as a more
important criterion, this being especially so for non-marketing qualified managers.

Although there is a possibility that LEA managers might de-select entrepreneurs through
emphasising planning ability, the selection of "Drive and Motivation" as their second most
important criterion may act against this. A more likely consequence of placing planning ability
as the most important criterion for selection is that they may fail to recognise this weakness in
entrepreneurs and thus fail to provide help to ameliorate it. As entrepreneurs are often willing to
recognise their own weakness in planning we suggest that advice in planning should be, and be
promoted as, a major aspect of the LEAs' services.

There may also be a second form of de-selection of entrepreneurs through the funding
mechanisms of LEAs by TECs. TECs impose financial criteria restrict the types of clients who
LEAs can accept. For example, a client must have 30% equity provided by a bank and around
30% provided by themselves before the LEA can offer a balancing 30% up to a maximum of £5-
6,000 (TEC Employment Department Group 1993). A potentially successful entrepreneur with

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the required "good idea" and personal characteristics may well not have this amount of financial
backing.

Although the targeting of promotion activity does show a broad based approach, clustering
occurs in certain areas such as job clubs and small businesses, managers and employed sectors
are not mentioned and, again, entrepreneurs are not identified as a target group. So how can
entrepreneurs and those likely to set up small business be targeted (i.e., approached)?

Research on socio-economic factors (Stanworth and Gray 1991; Stanworth et al. 1990) suggests
that those most likely to set up their own businesses have parents with a small business
background (the most predictive factor), are middle aged, male and married, and depending on
area, have an ethnicity from either the Indian sub-continent or the Mediterranean. The level of
education depends on the type of business, with the serving of an apprenticeship of some sort
being a common factor except in businesses such as computers, design, advertising or marketing
where possession of a degree is often found. These variables are similar to those typically
identified and used in market segmentation (Kotler 1994), and thus they can be used by LEA
managers in designing and promoting their services. We also suggest that complementary
research could be done on the characteristics of LEA clients who have already been successful,
again, this would help target potential clients.

In summary, this study points to a poor application of formal marketing procedures in the
management of LEAs. There is consequently a poor understanding within management of the
LEAs' position in the marketplace and the characteristics of their target market. The client
selection procedure may even de-select entrepreneurs and the targeting of promotional material
is so clustered that it may exclude many potential entrepreneurs. Although 50% of LEAs possess
managerial personnel with formal marketing qualifications the data suggest that these centres are
performing little better than those without this resource. Finally, research exists which should
allow better targeting of potential clients.

RECOMMENDATIONS

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By addressing the targeting of appropriate client groups, how to reach and best serve them, the
application of formal marketing would improve the ability of LEAs to perform their function.
The following recommendations are presented as a first step in improving marketing expertise
within LEAs and of encouraging managers to use that expertise.

MANAGEMENT SELECTION: Guide-lines for the selection and recruitment of LEA managers
should identify a marketing orientation within applicants' qualifications. The results indicate that
LEA managers with marketing qualifications need further training in marketing, however, since
some aspects of marketing were employed, they may not need as comprehensive a training as
non-marketing qualified managers.

TRAINING: Training in marketing should be provided for managers. This would ensure that
existing managers acquire marketing skills and that managers holding marketing qualifications
were guided on the application of their skills in the enterprise context. Particular emphasis
should be given to both "entrepreneur spotting", i.e., who and how to target them, and how to
interact with entrepreneurs, through examination of their activities and abilities and their wider
personal and social characteristics, e.g., as represented in the managerial style of the
entrepreneurial "visionary leader" (Richardson, Gregory and Turton 1994) and the "innovator"
(Kirton 1976).

GUIDE-LINES: LEA Management guide-lines must include marketing strategy - covering the
identification of key target segments and the development of a 'Marketing Mix' (i.e. a service
designed for, and promotion strategy aimed at, entrepreneurs).

A useful next step in improving LEAs' effectiveness would be the development of a

comprehensive guide to the application of formal marketing in the enterprise development
context. As well as covering the Marketing issues above, such a guide would also cover the
conducting of audits and skills training in the implementation of a marketing strategy.

ACKNOWLEDGEMENTS: We would like to thank the referees for their helpful suggestions,

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these have been incorporated into this paper.

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