Abstract
Introduction
The small and medium enterprise (SME) sector in Oman is striving to achieve its production and marketing objectives to prove its significant role in the economic development of Oman. Many of the challenges due to the technological development associated with the dramatic change in the communication process have directly affected the increase in the number of products and services in the Omani market (Bilal & Al Mqbali, 2015). The SME sector in Oman is characterized by an increasing number of enterprises that provide the same products and services or close substitutes. This has created aggressive competition leaded to the need for differentiation in terms of such products or services (Ashrafi & Murtaza, 2008). This differentiation can be achieved through a number of features introduced to gain the satisfaction of customers. At the same time, developments in communication processes have enabled customers to recognize the features of the offered products and services in the local market via traditional and electronic (social media) communication methods (González-Martıín, Pérez-Pavón, González-Pérez, Hernández-Méndez, & Álvarez-García, 2000). All these factors have forced the SME sector in Oman to seek to create a competitive advantage in an attempt to attract new customers through innovation and creativity, to cope with the new needs of the customers and the changes in consumption patterns on the part of Omani society. The quick response of SMEs to these changes at the right time will lead to attracting new customers and retaining the old ones. This process should maintain the quality of products and services and lead to low-cost strategies that will affect the price of the products and services (Stevenson & Hojati, 2007).
Competitive advantage enables an organization to differentiate the quality of its products or services, albeit at a low cost, to create superior value for its customers and to serve them better than is the case with the products and services of its competitors (Porter, 2008). In the same context, distribution channels are significant for the organization in terms of increasing the level of availability of its products and services and highlighting the key features via the promotion process. In general, all the efforts on the part of the organization should be in the context of improving customer satisfaction and increasing loyalty, by attracting their attention with regard to the special features of the offered product or service. This will lead to an increase in market share with regard to the organization’s products and will lead to the creation of a profitable relationship with customers that will ensure the survival of the organization.
The marketing mix is considered to be one of the most important aspects of the marketing process. It plays a significant role in creating value and satisfaction for the customer. In particular, the marketing mix or 4Ps (product, price, promotion, and place) operates as the main forces when it comes to meeting the demands of customer and creating a long, profitable relationship with them. In fact, the traditional theoretical framework with regard to the implementation of marketing-management process activities is based on the concept of the marketing mix (Festa, Cuomo, Metallo, & Festa, 2016).
The importance of this study is based on the significant role of the marketing mix (product, price, place, and promotion) in achieving a competitive advantage for the SME sector in the Al Buraimi Governorate, which enables this sector to face the threats of competitors. The Al Buraimi Governorate is located on the border, very close to the UAE market. This strategic location creates a dynamic environment featuring a high level of competition. The need for a competitive advantage is the main challenge in this context that faces the Al Buraimi SMEs for them to survive, to attract new customers, and to develop new markets.
There is a lack of studies in terms of the marketing mix and competitive advantage with regard to the SME sector in Oman. However, this study aims to fill this gap and to identify the role of the marketing mix elements when it comes to creating competitive advantage in the SME sector in the Al Buraimi Governorate.
The theoretical framework of this study was formulated to analyze the impact of the marketing mix on the competitive advantage of the SME sector in the Al Buraimi Governorate in Oman based on independent variables (the marketing mix—the 4Ps) and dependent variables (competitive advantage). Some other studies have made use of the same framework in other countries (Ibidunni, 2011; M. Singh, 2012).
Adopting the above theoretical framework, this study makes use of a questionnaire to identify the impact of the marketing mix on the competitive advantage of the SME sector in the Al Buraimi Governorate in Oman. The main research question can be summarized as follows:
What is the impact of the marketing mix on the competitive advantage of the SME sector in the Al Buraimi Governorate in Oman?
The research sub-questions are as follows:
The hypotheses of this study based on the study questions are as follows:
The target population of this study is the SME sector in the Al Buraimi Governorate. A sample has been selected from the target population to answer this study’s research questions.
Literature Review
The formulation of a marketing mix depends on the nature of the activities of the organization and the nature of the targeted market. It must be put together in such a way as to enable the organization to meet its customers’ needs and wants (Sashi, 2012). The marketing mix concept works as a tool used by an organization to survive in a competitive environment. This concept is controlled by the organization and comprises four elements—product, price, place, and promotion (Owomoyela, Oyeniyi, & Ola, 2013). The organization should have a database of its customers to determine the most effective marketing mix, taking into consideration the macro and micro environment of the organization. The 4Ps are considered to be the focal point in establishing a marketing structure within the organization through providing a good-quality product at an affordable price, in the right place (Ho & Hung, 2008).
According to Kotler (2011), the marketing mix is “The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.” The main objective of this mix is to meet the needs and wants of the targeted market. It impacts the demand by tracing the needs and wants of the current and potential customers. The positive perception on the part of customers comes through the products and services that create value for them and provides them with satisfaction, which gives the organization a notable edge over its competitors (Kotler, 2011).
The Product
The product makes up the first element of the marketing mix and affects the other three elements of the mix due to its nature and attributes. The product can vary in terms of its attributes and features based on the dissimilarity of the target markets in terms of the variance of the needs and wants that make up the market components and the marketing environment (Mathieu, 2001).
Kotler and Armstrong describe a product as “ . . . anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want.” On the contrary, a service can be defined as “. . .any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything” (Kotler & Armstrong, 2012).
In the SME context, the sum of features and attributes of a product or service is the cornerstone for the customer’s satisfaction and loyalty. To build a profitable relationship with customers, the enterprise must provide products of good quality and high performance which are consistent with the needs and wants of the customers in such a way as to generate customer satisfaction and create a competitive advantage. The change in the lifestyle and the culture of customers due to change in the social, technological, political, and economic environments have affected SME sector activities in Al Buraimi. This impact and changes have forced the SME sector in Al Buraimi to focus on two types of consumer product—convenience products and shopping products. Convenience products are frequently purchased with minimal buying effort and little comparison. Shopping products are less frequent purchases and require more shopping effort in terms of price, quality, and style comparisons (Berens, Riel, & Bruggen, 2005).
The Price
The price is the second element in the marketing mix concept. It is affected by the purchasing power of the customer and considered to be the critical element in the buying decision. Price can be defined briefly as the amount the consumer must exchange to receive an offering (Singh, 2012). Various factors affect the pricing strategy of an organization, including the cost of materials, product differentiation, competition level, market share, and the customer’s perceived value of the product (Davenport & Harris, 2007). The product’s price in the SME sector in Al Buraimi is affected by many factors such as the total cost, the profit margin, the product lifecycle, regulations, economic policies, and so on.
According to Avlonitis and Indounas (2005), pricing methods can be summarized in three main categories as follows:
a. Cost-based methods: This category includes the cost-plus method, target return pricing, break-even analysis, contribution analysis, and marginal pricing.
b. Competition-based methods: These include pricing similar to that of the organization’s competitors or according to market average prices, pricing above competitors, pricing below competitors, and pricing according to the dominant price in the market.
c. Demand-based methods: These include perceived-value pricing (based on the customer’s perception of value), value pricing, and pricing according to the customers’ needs (Avlonitis & Indounas, 2005).
The same study by Avlonitis and Indounas in 2005 stated that the main pricing objectives are to hold on to profitable customers, to attract new customers, and to satisfy the customers’ needs.
The organization should adopt the right pricing strategy for its products and services depending on the micro and macro environments in which it operates. For instance, some firms use skimming pricing strategy to recover its costs rapidly when there is a low level of price sensitivity in the market. On the contrary, some firms use a penetration pricing strategy by fixing a lower price than that of its competitors to gain a high level of market share. However, the pricing strategy of the SME sector in Al Buraimi is to try to set suitable prices for its products and services by studying and analyzing the local market and the level of competition.
The Place
The place can be defined as the mechanism through which goods and services are moved from the provider or manufacturer to the consumer (Goi, 2009). The place is one of marketing mix elements and includes distribution channels, warehousing facilities, mode of transportation, location, assortment, convergence, logistics, and inventory control management (Singh, 2012). The distribution channels comprise all those activities that contribute to the delivery of the product or service to the customer. These channels help the organization to promote, sell, and distribute its goods to final buyers, such as resellers, physical distribution firms, marketing services agencies, and financial intermediaries (Kotler & Armstrong, 2012).
The implementation of marketing strategies does not depend on achieving production objectives, price fixing, or promotion only. It is also associated with a successful distribution process that allows the organization to meet the availability goal of providing the product in the right place and at the right time. Firms in the SME sector in Al Buraimi use the distribution channels as a way to communicate with their customers via the distribution points, to reach them in the right time and at the right place. According to Szopa and Pękała (2012), there are many advantages associated with distribution channels such as moving the goods from the place of production to the demand areas, providing information for the customers about the products and services, and promoting products and services.
The Promotion
Promotion is one of the most powerful elements in the marketing mix. It means to communicate and persuade the target market—by identifying the needs of the target segment—to buy the company’s products. The promotion concept includes all marketing activities used to inform, persuade, and remind the target market about a firm and its products or services, in such a way as to build a favorable image in the mind of the customer (Sidhanta & Chakrabarty, 2010). In the same context, Kotler and Armstrong (2012) defined promotion as human activities based on a communication process that can be directed via personal selling points or indirectly via advertising messages through the media.
The main objective of the promotion process is to identify the firm and its products or services for the target market, and to increase the level of purchasing. The brand establishment and the brand name are based on the promotion process. The SME sector in Al Buraimi focuses on the promotion process to identify the products and services of the individual firm and to persuade their customers to buy their products or services again and again. However, the promotion process is affected by the decisions of SME marketing managers with regard to the level of marketing expenditure or promotion. The promotion process comprises of a number of components such as advertising, personal selling, sales promotion, and public relations. All of these components blend together to create the promotion mix aimed at achieving the organization’s marketing objectives. Advertising is the most powerful element of the promotion mix, due to its involvement in developing the image of the product in the market, or positioning the product in the mind of the customer (Latif & Abideen, 2011).
The Competitive Advantage
In 1985, Porter designed the first model of competitive advantage. It became a framework for strategic thinking about how to be better than competitors in the market. The definition of competitive advantage—according to Porter—is the value that the firm has created for its customers in such a way as to outperform its competitors, by providing equal benefits or more advanced products or services than its competitors. It includes access to natural resources such as high-grade ores or a low-cost power sources, highly skilled labor, geographic location, high entry barriers, and access to new technology (Porter, 1985). The Organisation for Economic Co-Operation and Development (OECD) defines competition on the local economy level in terms of the free market conditions and the increase in the income of its citizen on a long-term basis (Oh, Choi, & Choi, 2013). However, good-quality and high-performance products can create a competitive advantage for the firm, even though they are more expensive than those of the competitors.
In the context of technological revolution, Porter presented the diamond theory to ascertain the requirement factors needed to create a competitive business environment (Smit, 2010). The main idea of this theory is the use of dynamic analysis to study the competitive advantage of organizations. There are four determinants of this theory as follows:
Factor conditions: This refers to the nation’s position in terms of factors of production, such as skilled labor or infrastructure.
Demand conditions: When domestic demand conditions are relatively sophisticated and there is an overall expectation in terms of high-quality products and services, domestic organizations are more likely to respond by upgrading their productive capabilities.
Related and supporting industries: The extent to which the nation possesses clusters of sophisticated suppliers and related industries (Porter, 1990).
Context for rivalry: The industrial context in which firms are created, organized, and managed, resulting in an overall level of domestic rivalry within and across industries.
A firm strives to survive in the market and to compete by differentiating its products and services in terms of cost, price, quality, and so on. The SME sector in Al Buraimi is working very hard to create a competitive advantage by developing its products and services, and establishing a marketing mix strategy to achieve this goal. Porter (2008) divided the competitive advantage issue into three generic competitive strategies as follows:
Cost leadership strategy: seeking to attain the lowest total overall costs relative to other competitors.
Differentiation strategy: attempting to create a unique and distinctive product or service for which customers will pay a premium.
Focus strategy: using a cost or differentiation advantage to exploit a particular market segment rather than a larger market.
Hill and Jones identified four building blocks needed to build a competitive advantage. They are as follows: (a) innovation, (b) supervisor efficiency, (c) superior quality, and (d) superior customer responsiveness (Clarke & Chen, 2009; Hill, Jones, & Schilling, 2014). The SME sector in Al Buraimi is based on providing different products and services according to the nature of the enterprises and the needs of its target market. Therefore, each enterprise must analyze its target market to identify its components by segmentation, targeting, and positioning. The changes in the marketing environment in the Al Buraimi Governorate is a vital issue for the SME sector, to allow it to maintain a competitive advantage and to monitor the market situation continuously.
The Methodology and the Model
As was mentioned before, the main objective of this article is to determining the impact of the marketing mix on the competitive advantage of the SME sector in the Al Buraimi Governorate in Oman. To achieve this objective, this study makes use of a descriptive analysis approach to analyze the collected data regarding the level of impact of the marketing mix (product, price, place, and promotion), on the competitive advantage of the SME sector in Al Buraimi. The accessible population in this study (the portion of the population to which the researcher has reasonable access; a subset of the target population, which is limited to Al Buraimi Governorate) is 211 and the sample size is 100 (almost 50% of the total population). For this reason, the sample size of this study reflects the characteristics of the population, so those sample findings can be generalized to the population. The data have been collected through the use of a questionnaire that is distributed to SMEs in the Al Buraimi region according to the Oman Chamber of Commerce and Industry (OCCI) registrations. The total population according to OCCI is 211 SMEs. To achieve the objective of this study, 100 SMEs were selected randomly. However, the researcher processed only 75 questionnaires due to missing data. The questionnaire comprised two sections. The first one is about the personal and demographic information of the respondents, while the second part consists of questions used to identify the impact of the marketing mix on the competitive advantage in the SME sector in Al Buraimi. The 5-point Likert-type scale format in this study will use standardized response categories. This format is simple to construct and is expected to produce a highly reliable scale. In addition, it’s easy to read and complete for respondents. The scale range is distributed as follows:
The Sample Size
The author used Table 1 (sample size categorical data) to demonstrate how to determine minimum returned sample size for a given population size for categorical data to use in multivariate analysis. According to Barlett, Kotrlik, and Higgins (2001), it is usual for researchers to have different opinions about calculation of sample size, but the procedures used in this process should always be reported.
Sample Size Categorical Data.
According to the OCCI, the total number of SMEs in Al Buraimi is 211 (Table 2). The total number of managers, general managers, and CEOs in 211 SMEs in Al Buraimi is 1,072 (Table 3).
SMEs in Oman as per Location Distribution.
Bold values indicates to the number of SMEs in Al Buraimi city (which is studied in this paper).
Number of Managers Level and Above in SMEs in Oman.
Bold values indicates the number of staff in SMEs in Al Bruaimi, by their gender and positions (which is the target population for this study).
The Findings
This section presents statistical analysis for the collected data, with the tables in this section presenting the results (means, standard deviation, and evaluation level) for each theme. Table 4 shows that the majority of respondents have a high evolution level for the product items (
Mean and
The first item with regard to product theme came first order in terms of the priority of the respondents (
Table 5 presents the means and
Mean and
Table 6 illustrates the means and
Mean and
Table 7 presents the means and
Mean and
Table 8 presents the descriptive analysis for the relative importance for each of the marketing mix elements on the part of Al Buraimi’s SMEs. It is obvious that the market in the Al Buraimi Governorate is characterized by price sensitivity. According to the respondents in this study, price comes in first place in terms of the relative importance of the marketing mix elements.
Mean and
Table 9 illustrates the statistical analysis for the competitive advantage variables in terms of Al Buraimi’s SMEs. The general impression of the respondents with regard to this theme is that there is a medium level of satisfaction with regard to the competitive advantage in Al Buraimi’s SMEs (
Mean and
Hypotheses Test Results
Before this stage, the researcher applied some tests to analyze the properties of the collected data such as a homogeneity test and a multicollinearity test. However, both of these tests have been done and meted. The variance inflation factor (VIF) test results show that the VIF values are less than the critical value as shown in Table 10.
VIF Test.
The accepted variance.
Table 11 illustrates the multiple liner regression analysis used to test the marketing mix elements (product, price, place, and promotion) in terms of achieving a competitive advantages on the part of Al Buraimi’s SMEs. The product element in this study explained 46% of the changes in competitive advantage for the SME sector in Al Buraimi. The β value for the product is .598 which means that the SME sector in Al Buraimi can increase the involvement of the product element with regard to its competitive advantage level by 60%. The
Multiple Regression Analysis.
Conclusion and Recommendations
From the above discussion concerning the impact of marketing mix elements (product, price, place, and promotion) on achieving a competitive advantage in the case of Al Buraimi’s SMEs, this study concludes that the marketing mix elements have a significant role to play in achieving a competitive advantages on the part of the SME sector in the Al Buraimi Governorate. According to the results of this study, the most effective element when it comes to achieving competitive advantage is price. In fact, price can increase the level of competitive advantage with regard to Al Buraimi SMEs by 85%. This indicates that Al Buraimi’s SMEs should pay close attention to this element in a highly sensitive market environment. In general, this study shows that the marketing mix elements have a significant role to play in creating and increasing competitive advantage in the SME context in Al Buraimi.
Based on the finding and the discussion, to create a competitive advantage for Al Buraimi’s SME products and services, the following are some recommendations in this regard:
The marketing environment in Al Buraimi is price sensitive. Therefore, the SME sector should provide affordable products and services, taking into consideration the income level of its customers and their culture.
There is a consensus—based on the results of this study—about the poor quality of SME products and services in Al Buraimi. Therefore, SMEs will have to develop the quality and performance of their products and services to create a competitive advantage.
The distribution system of SMEs in Al Buraimi is effective due to the small size of the Al Buraimi market. However, the SMEs should expand their distribution channels to penetrate new markets such as the Sohar or AlAin markets.
The SMEs in Al Buraimi should focus on promotional activities to make their products and services clear and attractive. In general, there is a lack of promotional tools in Al Buraimi (such as large screens and street ads). The social media should also be involved as one of the promotional activities in the SME sector in the Al Buraimi Governorate.
Pricing Strategies Suggested Based on Research Findings
The SME sector in Al Buraimi should use effective pricing strategies with consideration of wide range of factors such as competitor offerings and distribution costs. A good pricing strategy helps in determining the price point at which SMEs can maximize profit on sales of their products and services. However, the SME sector in Al Buraimi should be careful when they are setting their pricing strategies, as customers will not purchase products that are priced too high, and the low prices will not cover all of the business’ costs. Along with marketing mix elements, price has a profound effect on the success of SME sector in Al Buraimi region. According to the research findings, here are some of the various pricing strategies can be implemented when setting prices on SME’s products and services in Al Buraimi:
Within the sample size of this study, there were some SMEs that sell unique products and service; the ideal pricing strategies for these type of business is premium pricing (also it called
In the same context, some of this study sample size is still in infancy stages; they need to attract customers by offering lower prices on their products and services. The suggested pricing strategy in this case is penetration strategy which is suitable for SME sector to draw attention away from other competitors.
For the SMEs that deal with food suppliers and discount retailers, the appropriate strategy to be implemented in this case is economy pricing strategy. This strategy aims to attract the most price-conscious of customers by minimizing the cost associated with marketing and production to keep products prices down. The SMEs with this strategy should target customers who would like to purchase their needs without frills.
In case of the target customers of some SMEs who have a very high price sensitivity, they should plan to increase demand by creating an illusion of enhanced value for their target customers by applying a psychology pricing strategy. This strategy refers to techniques that marketers use to encourage customers to respond on emotional levels rather than logical ones. For instance, setting the price of a product at US$99 is proven to attract more consumers than setting it at US$100, even though the true difference here is quite small. One explanation for this trend is that consumers tend to put more attention on the first number on a price tag than the last.
Limitations of the Study
This article focuses on identifying the role of marketing mix (product, price, place, and promotion) on achieving a competitive advantage in the Al Buraimi Governorate in Oman. The population of this study was limited to the SME sector in Al Buraimi. Due to a changing marketing environment and customer culture, we cannot generalize the findings of this study to other governorates in Oman. However, this article adds to the literature on marketing mix elements and competitive advantage in Oman and other Gulf countries where the literature in this context is still limited. In addition, the study reports some results and makes a number of recommendations for achieving a competitive advantage in the SME sector using an appropriate marketing mix.
Scope for Further Research
This study can be a platform for the coming studies in SMEs in Omani context. The collected data and statistical information are up to date and can be useful for further research. As there is a lack in studies on marketing mix concepts and competitive advantage in SME sector in Oman, this study adds to the literature on this field. However, the marketing mix and its role on achieving a competitive advantage in SME sector in Oman still need further studies to cover other dimensions of this area. The marketing mix elements (product, price, place, and promotion) are only some dimensions which are limited to this study. As this study was conducted in Al Buraimi region in Oman, which is one of 52 regions in Oman, further studies can be carried out in other regions that may reveal more explanation of how to create a competitive advantage by implementing marketing mix concepts in SME sector. In Omani context, the culture is different from one region to another, which results in changing of marketing environment in each region, so further research can be conducted base on this difference and characteristics of each region.
Further study on the impact of the competitive advantage and marketing mix concepts could be extended to other sectors such as large size organization, not-for-profit-organization, and so on. On the contrary, this study utilized survey guide on which findings were subjective to the opinions of each respondents based on the questionnaire items; in further studies, other research tools and instrument of data collection should be utilized. In addition, the scope of further studies can be in assessing more pricing strategies that can be implemented in SME sector. Moreover, marketing mix elements in this study was limited to four elements only (product, place, price, and promotion); these elements can be extended to other marketing mix concepts such as people, process, and physical evidence.