MSMEs with strong marketing focus grow faster

CRISIL analysed the performance of 1,550 micro, small, and medium enterprises (MSMEs) in the manufacturing and trading sector, which were rated on the basis of their 2013-14 (financial year April 1 to March 31) financials, and found that MSMEs that focused on marketing strategies registered a higher growth than those with limited strategies in place. As a part of its ratings process for MSMEs, CRISIL analyses marketing strategies by looking at aspects such as MSMEs' dependence on word-of-mouth publicity, the presence and strength of their marketing team or networks, and their use of advertising or publicity, including online advertising and participation in trade events.

The average sales of MSMEs that had an adequate marketing strategy increased to Rs 33.54 crore in 2013-14, from Rs 23.23 crore in 2011-12 - a compound annual growth rate (CAGR) of 20.16 per cent. In comparison, the average sales of MSMEs with a limited marketing strategy increased to Rs 14.45 crore in 2013-14, from Rs 12.22 crore in 2011-12 - a CAGR of 8.74 per cent.

Unlike large corporates, MSMSEs have a limited marketing budget. However, as MSMEs are mostly regional players with a limited product range, they can choose to build an efficient marketing network supported by low-cost advertising media to enhance their business. In fact, several small players now use CRISIL MSME Ratings on their websites and product brochures as one of their marketing tools.

Note: CRISIL has rated over 75,000 MSMEs in India. This fortnightly tracker presents to our readers insights on MSMEs, a key element of the Indian economy