Problems and Prospects of Marketing in Small-Scale Industries in Nigeria

Problems and Prospects of Marketing in Small-Scale Industries in Nigeria

Marketing is the link between the needs of a society and its industrial activities.   It is that all function that matches the organization’s offering to the ever-changing need of the market place.   According to a Renowned Market Scholar Peter Drucker “Marketing is so basic that cannot be considered a separate function.   It is the whole business seen from the point of view of its final result, that is from the customer’s point of view.

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Various definitions of marketing have been given over time.   Some have called it a business activity, a group of related business activities, others have seen it as a process of exchanging or transferring ownership of products and as so many other things.

The committee of the American Marketing Association defined marketing as “the performance of business activities that direct the flow of goods and services from producers to consumers or user”.

The British Institutes of Marketing defined marketing as the creative management function which promotes trade and employment by assessing consumer needs and initiating research and development to meet them.   It co-ordinates the resources of production and distribution of goods and services, determines and directs the nature and scale of the total effort required to sell profitably the maximum production to the ultimate user.

Marketing is human activity directed at satisfying needs and wants through exchange processes (Kotler 1980 : 9).

Marketing is the social and managerial process need and want through creating and exchanging products and value with other (Kotler 1989 : 12).

Marketing is the process of planning and executing the conception, pricing promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objective (Marketing News 1985 : 1).

Marketing is all important set of creative human activities aimed at identifying, anticipating and satisfying human needs and wants through exchanging as efficiently and as effectively as possible (Adirika 1990 : 3).

  An Overview of Small-Scale Business Development in Nigeria

The important of small-scale industries in the restructuring and development of Nigerian economy is widely recognized.  The small-scale business consisted mainly of household units carrying on diverse type of business activities in the traditional manner.   Most of these units do not employ paid workers.  Establishment of this type are to be found in a wide variety of manufacturing less like weaving, tailoring etc.  They are sometimes referred to as “cottage” industries.

The typical traditional cottage enterprises in Nigeria is generally a “one man” unit.  A typical example of one is the Black Smiting industry in Awka in Anambra State, which is mainly organized on family craft and guilds basis.  There also exist some other small-scale industries in Nigeria which have relatively modern origins.   Examples of such industries are banking, vehicle, and bicycle repairing, toothpick making and photography etc.

Definition and Characteristics of Small-Scale Enterprises

The task of determining what constitute a small business may be very difficult.   It tends to differ among countries and individuals.  There is no universally accepted definition of small-scale industry.  This arises from differences in industrial organization of countries of different levels of economic adversement or differences in economic development in parts of the same country.   For exampled, a firm which would be regarded as a “small business” in the U.S may nevertheless be regarded as same in Third World Countries like Nigeria.

Differences in levels of economic development in Nigeria gave rise to the following definitions.

1)                In the Central Bank of Nigeria credit guidelines to commercial and merchant Banks, since 1979 small-scale enterprises are defined as establishments whose annual turnover does exceed N500,000.

2)                In the same year, the small-scale industry division of the federal ministry of industries defined small-scale industries as “Enterprises having investment (capital investment inland, employing etc) of up to
N60,000 and employing not more than 50 persons.

3)                The University of Ife (now Obafemi Awolowo University) industrial research unit defines small-scale industry as one whose total assets in capital are less the 50 full time workers.

4)                According to Klott Lawrence, 1973, small-scale industry is any industry which is independently owned and operated and not dominant in its area of operation.

More importantly the bottom report identified these major characteristics of the small-scale firm as:

1)                Its owners or part owners manage it in a personalized manner.

2)                It sis serves a relatively small markets.

3)                It is independent in so far as the owner manager is able to make principal decision affecting the firms (Brown Longenecker 1971).

4)                Expectation of quick and concrete result.

5)                A strong sense of enterprise ie. Strong determination to succeed despite all odds;

These enterprises generally have low technological base.  Most of the operations are manual or at least crudely automated.   Output is generally low and hence products are often directed to the nearby markets.

Policies regarding working conditions are often more flexible and changeable.   Employers are often low-skilled people. There is generally lack of planning of any sort and quality control one more often not always regarded as a priority issue.

The level of education the owner is usually low with consequent low level of business management technical skills and market information.

The manager handles and supervises the financing production marketing and personnel of the enterprise.

The Importance of Small-Scale Industries for Economic Development

The important of small-scale enterprises in the promotion of economic development has always been at the forefront of developing strategies.   However, many developing countries have failed to adopt this strategy owing to their believe that it is a relatively show process of industrialization which may not be very compatible with their desire to catch with they industrial countries.

These along with the relative availability of foreign exchange in the early days of independence had encourage many of these countries to follow a different mode of industrialization for transition from a largely against society to a modern industrial sector.

The importance and role which small-scale business can play in the development of the industrial base of any economy can be seen in the following advantages, which it has over larger business units.

1)                It provides a good training ground for entrepreneur because necessity is the mother of investor.

2)                It is much more labour intensive and therefore, creates more jobs.

3)                It is much more likely to utilize local raw materials.

Just to think of what it would look like to live in a community without small-scale business.   Many products and services would be unavailable if the existing small-scale industries in Nigeria are expended and modernized, it would tackle the problem of unemployment and undeveloped, which are the prevailing economic disease in most African countries.

Another point in favour of small-scale industries is that, it is an area for experimentation in the development of skills and new forms of organization. Skilled labourers, like repair specialists, welders etc are developed in the small-scale industries and they are often the agent that implant new technology modes of organization etc.

Strategy for Marketing in Small-Scale Business

Marketing strategy is a set of determinants that guides or directs the manager of an enterprises to reach their desired long-term market positions comprises the objectives that are sought and the strategic ideas (or strategies) that are to accomplish it.

Strategy can therefore be seen as the “game plan” of achieving the set objectives.   In developing the game-plan a manager faces a lot of a choice, because each objectives can be achieved in a number of ways.

There re many different plans that require marketing input.

1)        Corporate plan:      This describes the overall business plan. It may be an annual, intermediate/medium, or long range plan.  It deals with the overall company plan in general.   So it does with company missions, growth strategies, portfolio decision, investment decisions, and current objectives and goals.

2)        Production plan:    Under this strategy, each product manager prepares this plan and it describes the objectives, goals, strategies and tactics for a particular product or product category.

3)        Brand Plan:  Each brand manger prefers this plan, and it describes the objective, goals strategies and tactics for a specific brand within a product category.

4)        Market Plan:            This is a plan for cultivating developing and serving a particular market.   The market managers usually prepare this plan if a company has market managers, even though the company may also have product managers.

5)        Functional Plan:      Under functional, this is a plan for one or other of the major functions such as marketing, manufacturing, finance, personnel, research and development.

General Problems Encountered By Small-Scale Business in Nigeria.

Despite the importance of the small-scale business to the nation economic development this sector has been facing quite a number of varied problems which skill persist today.

According to (Uzowulu 1987) he wrote that; An Indian friend once told him that if he were a Nigerian engineer or businessman, he would not complain because prospects for small medium scale business are abound in the country.   He described Nigeria as a virgin in respect of small medium scale business development.   I partially agreed with his view but when I explained to him the problems of financing, infrastructure and obtaining government permits in setting up these business, he realized that the situation in India and Nigeria are different.   Mike Edernereijor, writing on the cases of failure of small-scale business as:

1)                Lack of managerial skill

2)                Lack of technical skill

3)                Lack of commercial skill

4)                Resistance to control from outside small-scale business in Nigeria.

K.A. Olumu in his contribution in an article captioned problems of small-scale business in the past 25 years, identifies the problems of his sector as:-

1)                Inadequate financial resources

2)                Inadequate raw materials and their importation problems.

3)                Marketing problems

4)                Inadequate technology and production problems

5)                Labour and inadequate managerial experience.

The treatment of these problems shall be directed to the following factors as organizational and managerial capacity infrastructural and utility problems technical marketing socio-cultural problems and finance and financial control.

Organizational and Managerial Capacity: Unlike in the past when it was generally believed their inadequate finance was the cardinal problem of our small-scale businessman.  It has now become crystal clear that the current problems is mainly inadequate supply of trained manpower in the various relevant fields.  This shortage of trained manpower to man our small-scale business generates a chain of other problems mainly organizational and managerial problems.

These organizational and managerial problems could in turn adversely effect both in product and the marketing performance of the small-scale enterprises.  The managerial problem was due to lack of prior knowledge or proper feasibility study of the industry before plunging in and the educational orientation in Nigeria, which does not favour the small-scale enterprises so much. In order to accelerate the need for developing the small-scale business programmes, initiative policies backed up by sound institutional support are necessary to identify motivate and strengthen the new breed of entrepreneur.

The concept of entrepreneurship simply means working for yourselves to profit by risk and initiative is based on four key success factors necessary for starting a business.   They are as follows:-

Motivation, ideas, ability/skill and resources/both physical and financial.   It should also be remarked here that although financial support is of key importance in a rapidly changing economy like ours.   The small-scale businessman is as much in need of business knowledge, information and advises as he is of financial support.   For developing countries and in particular for the non-industrial countries, a lack of skills is frequently the greatest obstacle to industrial development.

One of the biggest in element to expansion and successful growth is the inability of key managers to change their attitude and behaviour to fit the changing needs of the organization (Osaze 1986).

Hence education and training can play a crucial role in changing entrepreneurial role and attitudes towards better management techniques.

Furthermore, the crude employment of small-scale business in Nigeria does not make for effective management.   Most of these small-scale industries, were they have or make use of employees, employ either their relatives or friends.   This employment policy based on ascribed rather than the acquired qualification of man impedes the employment of the best-qualified workers.

Finance and Financial Control

The limitation on managerial ability, along with limited technical and commercial possibilities, makes the risk of lending to small-scale business very high.   In turn the limitation or shortage of business capital further aggravates the commercial and managerial problem, as most small-scale industries in Nigeria are unable to employ competent managers and accountants.   Their books of accountant are not always properly kept.   It is not unusual to find a mix-up in personal and business funds and consequently constant diversion of operating finds to the private need of the managing director.   These constraints in inhibit the ability of the small-scale business to raise fund from commercial banks.

Put at its crudest form the financial problem of the small firm is that of finding funds for expansion at the right time or the right-type and in the right qualities at various levels of employment.   (Business Times Feb. 17, 1986).

Furthermore, there is no discernable institutional equity capital gap as Nigerian entrepreneur have been determined to be largely unwilling to share control of their enterprises with outsiders.  However, there is a strong evidence for an institutional long-term loan gap which may be contributing to the slow expansion rate of profitable well managed small venture.   Commercial financial institutions shy away from small venture because of their so-called perceived higher risk attribute.

Often the responsibility of this problem lies with the small firms themselves, which do not posses adequate information and financial controls system for proper decision making.

Another factors, which was, signaled the near demise of many small-scale business in Nigeria is the practice of small firm borrowing on short-term basis only to invest in the long term.

In periods of recession low levels of profits becomes insufficient to fund the business cash requirement.   This could lead to cash crises and possible failure – other major like government bureaucratic machinery and attitude of civil servants in securing permits or approvals relevant to setting up business constitute a major obstacle.

A great majority of small business does not have clear ideas of policy about the trade credit which they receive and are therefore unable to realize the cost associated with them.   This is why Olashora (1977) maintains that the problems of small-scale industries in Nigeria go beyond lack of finance.

The Practice of Marketing Concept in Small-Scale Business

Marketing has grown from its early origin in distribution and selling into a comprehensive picture for relating the business successfully and dynamically to its markets.    The conventional and traditional view of marketing the search for and stimulation of buyers conjures up an image of selling, influencing and persuading.   Seen from this point of view, marketing can be viewed as being not only a powerful but also an even dangerous technology for behaviour modification, making it possible to sell to people things they either do not want or that are actually bad for them.   This view of marketing is now giving way to an expanded and wider concept of marketing, which embraces the idea of sensitively searching for, serving and satisfying human needs.   From this point of view marketing is a set of human activities used by organizations both profit and non-profit making available not only products, but services, ideas or anything of value.

This is the broader concept of marketing contribution to business, as opposed to doing nothing but making people buy what they neither need nor wants.

Marketing precedes any organization whether small, medium or big.  For this reason, marketing maintains the same role in any of them.   The differences lie on to what extent-marketing role is required.

Therefore, these are the major roles of marketing concept in small-scale business are:

1)                Information to a company about a market, customer and acceptance of its products.   These are statistical information collected together and put into a meaningful form for the organization.

2)                Creating impact on a market, inject demand for product, influence consumer awareness and demand.   These roles include; pricing, product planning advertising, public relations, sales promotion etc.

3)                Analysis and interpretation of the results of marketing activities. These are very important in determining the marketing mix (price, promotion, product, place) and price volume relationship.

4)                Practical skills both in market research in the field or sales promotional work in personal selling or advertising.   A great deal of marketing technique of this kind is thus practical knowledge that comes from working with salesmen, copy writers, market analysts etc.

In as much as a small businessman who is engaged in marketing is to stick to the above roles, he is specifically advised based on the analysis of his company to use personal selling and local advertising.

Marketing of Production in Aqua Raphy (God’s Healing Water)

The distribution function is one of the marketing variables in the marketing mix.   It is, therefore, a marketing function.   The aim of the distribution function is to get goods and services from the manufacturer to the ultimate consumer transferring titles and physically moving the products in the process.

So, in marketing of Aqua Rapha (God’s Healing Water) they have different department in their company.   After the production of the packaged water, the factory men will communicate marketing manager for sales there by realizing funds that the finance department will keep for the progress enhancement of the company; ie money for fuel, because their method is to taking the product to their customers especially people that is buying in large quantity and to the whole sellers.   While some of their customers who have their own vehicle come to the factory and buy, mainly the retailers, some of them will come and buy it by themselves.

Therefore, their method is to go and distribute to their customers who buys in large quantity and they are not selling on credit but cash and carry, that is how they are marketing their product and they are using discount to their potential customers, giving them discount.   If they come to buy direct from the company, they will less money if you go direct to the factory but from the whole sellers they will sell on normal price.

So, any product exercise is useless if the out come of the exercise is not made available to the users through the distribution function generally.

Prospects and Viability for Promotion

Inspite of all odds the prospect of small-scale business are bright it is almost empire.   But to bring about utopia requires individual zeal and sacrifice.   The nation must condition herself to look forward and not that on the errors of the past which are characterized by the waste.

Mohammed Mustapha (1987) in his contribution mode, he made clear there must be a break away from established consumption pattern and seek unique solutions that we must use what we have to get what we want.

However, unpolished the result of our effort may be it will be a good beginning, also we must reject the effect of cultural imperism manifested in the shirts with slogans adoring foreign places which some have never been to and traditional which are alien to us.

Onyemelukwe (1974) maintains that the contribution of the inductive to the nation economy is impressive in terms of employment, and output.  The variety of production to dispersal and decentralization of economic activities that skills that the impact and the entrepreneurship that they develop.

The future lies in strengthening the sector in this various ways, particularly through modernizing its management techniques, and developing key branches of the sector and that are ancillary to the development of the large-scale industries and to the provision of the modern tools necessary for transformation of agriculture, commerce and industry.

Specialization flexibility and sophistry in techniques should be emphasized so that the small unit can grow into medium and large scale industries, while still meeting the challenging and changing needs of their localities.


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