Large businesses can expend substantially more resources on marketing, creating an ecosystem where the consumer is left unaware of SMBs providing competing products or services
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According to the biblical tale of David versus Goliath, the Philistine giant had been taunting the Israelites for 40 days to send a champion for single combat. Intimidated by his size, bearing, and weapons, his challenge had been ignored until David – a child, slight and unarmored – used a sling to knock Goliath out. David accomplished this through the intelligent use of tools, a feat that industry watchers and pundits today believe Indian SMBs could repeat with the help of artificial intelligence.
Goliath’s size and armor: Why SMBs have trouble competing with big business
The Indian market is notorious for its price consciousness. Research conducted by BCG and CII indicates that, relative to their global peers, Indian consumers are conservative in their spending habits, are more value conscious, and negotiate harder when making a purchase. Larger companies and brands tend to use economies of scale and deeper pockets to keep their overheads low and their margins high. SMBs are unable to challenge mass manufacturing MNCs and have to find relatively underserved niche audiences. This constrains their scope for growth.
Furthermore, large businesses can expend substantially more resources on marketing, creating an ecosystem where the consumer is left unaware of SMBs providing competing products or services. Consumers also safely presume that popular brands will have better customer support, something which SMBs can often ill-afford. Maintaining a team of salespersons and creating an effective after-sales support system require considerable resources, both human and technological – often outside the reach of small companies with limited manpower and finance.
David’s sling: How AI can help cut Goliath down to size
AI-driven software systems are already being deployed across the world by various companies looking to optimize their processes. Research from Infosys showed that, amongst the companies surveyed, the ones showing the greatest revenue growth over the past three years were ahead of their peers in terms of AI adoption. By analyzing business and market data, AI-based algorithms provided key insights to these companies to drive up sales, improve their marketing and customer support initiatives, and create better brand recognition.
For SMBs, AI can assist in a variety of ways. Supply chain management and distribution logistics are complex subjects that have a huge impact on costs and margins for business owners. Unlike big businesses, SMBs don’t usually have the resources to improve these systems and are thus at a disadvantage. AI can review their data and suggest ways to optimize the process, driving down costs and delivery times. SMBs also suffer from the lack of easily available manpower for various routine administrative tasks, something which AI can help automate.
SMBs can also create automated sales and after-sales support systems through the use of chatbots, an application of AI for Natural Language Processing. This can help SMBs provide comprehensive, around-the-clock after-sales support to customers, without needing to hire or train customer service personnel. This can not only save them money, but also improve the customer experience.
Spreading the story: AI-driven digital marketing for SMBs
Perhaps the biggest benefit to SMBs from AI comes in the arena of marketing. Conventionally, big companies spend astronomical amounts to propagate their brands and products, making it incredibly difficult for SMBs to compete for consumer attention and recall. Legacy broadcast channels like print and TV are far too expensive for most SMBs to access; advertising and marketing on these channels are, as a consequence, completely dominated by big businesses. While digital marketing through channels like Google and Facebook are more accessible for SMBs, big businesses outspend SMBs effectively even here.
Digital marketing channels are uniquely responsive to consumer behavior. If the consumer is searching for shoes, they are likely to see ads for shoes. Which ads get shown to what consumer is determined by a complex set of variables, which is what human digital marketing specialists attempt to decode. AI can accomplish this with much greater efficiency by constructing promotions to show up in a more targeted fashion, greatly increasing digital marketing ROI for SMBs. AI can thus take the sting out of the heavier ad spending that big businesses do, and increase sales and brand awareness for smaller businesses.
Taking into account the various ways in which AI can unlock greater efficiency for SMBs, it becomes clear that AI makes the battle between David and Goliath in the business landscape a much more even game. The advantages of big businesses – efficiency, greater brand awareness, comprehensive aftersales support – can be nullified by SMBs through AI. With various technology-driven startups offering AI-driven solutions to them, smaller businesses can – for the first time in decades – look forward to taking on the biggest companies and brands across market sectors and arenas on an equal footing.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.