The informal sector has gained recognition especially in third world countries. It has emerged as a source of increased output, income and employment for marginalized members of the society. This has come in handy considering the dismal performance of the formal sector in these countries. According to Nowak (1988), continents in which the sector has gained recognition are Africa, Latin America and Asia. It has continued to contribute a big portion of the Gross Domestic Product (GDP) in countries that are in these continents. Micro and small enterprises (MSEs) cut across all sectors of our country’s economy and provide one of the most prolific sources of employment, not to mention the breeding ground for medium and large industries which are critical for industrialization. According to the 2003 Kenya economy survey, employment within the MSE sector increased from 4.2 million persons in 2000 to 5.1 million persons engaged in employment. The sector contributes up to 18.4% of the country’s Gross Domestic Product (GDP). This sector therefore is not only a provider of goods and services, but also a driver in promoting competition and innovation, and enhancing the enterprise culture which is necessary for private sector development and industrialization. Despite the significant role played by the sector, it has continued to experience many binding constraints that have inhibited the realization of its full potential. These include poor access to markets, financial services, unfavorable policy, legal and regulatory environments among others.
According to the Sessional paper No. 2 of 2005 on development of MSEs for wealth and employment creation for poverty reduction, MSEs have a high mortality rates with most of them not surviving to see beyond their third anniversaries. This phenomenon has made it difficult for MSEs to graduate into medium and large scale enterprises, thus the ‘missing middle’. This has resulted in a weak base for industrial take-off and sustainable development. Although the flow of information on MSE markets has slightly improved, many MSEs still do not know where and how to access existing and relevant marketing information. As a result, the majority rely on informal feedback from customers. Competitiveness of MSEs remains weak due to poor product quality, packaging, advertising and distribution. The MSEs performance and competitiveness must therefore be increased if it is to effectively respond to the challenges of creating productive and sustainable employment opportunities, promoting economic growth and poverty reduction in the country.
Janson (1999) posed that the lack of marketing know-how of entrepreneurs displays itself starkly in most MSE business premises. It is common sight to notice a group of MSE entrepreneurs at one location selling the same kind of products and services to customers. Competition between them gets very tough such that, it is only the ‘lowest bidder’ who will win the customers. This in effect eats into their profit margins reducing the prospects for reinvestment and growth. This problem is noticed in the exhibition halls.
Namada-Mulla (2004), describes exhibition hall traders as those small scale businesses which are clustered together in a specific geographical location. They are characterized by public displays of goods and works of art. Over the last 10 years exhibition halls have stirred thriving small scale businesses. They are characterized by similarity in products; huge discounts offered ever changing consumer preferences. She further points out that stiff competition exists in exhibitions due to the characteristics indicated above. Entrepreneurs need to come up with marketing strategies that will guide them in responding to such challenge in the market arena such as high competition....